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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                                   FORM 10-K
 
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
    OF 1934
 
                   FOR THE FISCAL YEAR ENDED JANUARY 30, 1999
 
                                       OR
 
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934 [NO FEE REQUIRED]
 
                FOR THE TRANSITION PERIOD FROM _______ TO ______
 
                        COMMISSION FILE NUMBER: 0-02788
 
                         THE ELDER-BEERMAN STORES CORP.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<S>                                    <C>
                 OHIO                                31-0271980
   (STATE OR OTHER JURISDICTION OF                (I.R.S. EMPLOYER
    INCORPORATION OR ORGANIZATION)              IDENTIFICATION NO.)
</TABLE>
 
                      3155 EL-BEE ROAD, DAYTON, OHIO 45439
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
 
       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (937) 296-2700
 
        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
 
                           COMMON STOCK, NO PAR VALUE
                                (TITLE OF CLASS)
 
                             SHARE PURCHASE RIGHTS
                                (TITLE OF CLASS)
 
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.                              YES  X   NO  ___
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.                                                                   [ ]
 
As of April 13, 1999, the aggregate market value of the voting stock held by
non-affiliates of the registrant (based on the closing sale price of such stock
on such date) was approximately $137,215,190.*
 
The number of shares of Common Stock outstanding on April 13, 1999, was
16,037,880.
 
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.                                           Yes  X   No  ___
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*   Calculated by excluding all shares that may be deemed to be beneficially
    owned by executive officers and directors of the registrant, without
    conceding that all such persons are "affiliates" of the registrant for
    purposes of the federal securities laws.
<PAGE>   2
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                        PAGE
                                                                        ----
<S>       <C>                                                           <C>
                                   PART I
Item 1.   Business....................................................     1
          General Development of Business.............................     1
          Background..................................................     1
          Chapter 11 Case.............................................     2
          Business....................................................     2
          Merchandising...............................................     2
          Pricing.....................................................     3
          Purchasing and Distribution.................................     3
          Information Systems.........................................     4
          Marketing...................................................     4
          Credit Card Program.........................................     4
          Customer Service............................................     4
          Expansion...................................................     5
          Acquisitions................................................     5
          Seasonality.................................................     5
          Competition.................................................     5
          Associates..................................................     5
Item 2.   Properties..................................................     6
Item 3.   Legal Proceedings...........................................     9
Item 4.   Submission of Matters to a Vote of Security Holders.........     9
Executive Officers of the Registrant..................................     9
                                  PART II
Item 5.   Market for Common Equity and Related Stockholder Matters....    11
Item 6.   Selected Historical Financial Data..........................    12
Item 7.   Management's Discussions and Analysis of Financial Condition    13
          and Results of Operations...................................
          Results of Operations.......................................    13
          Fiscal 1998 Compared to Fiscal 1997.........................    13
          Fiscal 1997 Compared to Fiscal 1996.........................    14
          Liquidity and Capital Resources.............................    16
          Year 2000 Disclosure........................................    16
Item 7a.  Quantitative and Qualitative Disclosures About Market           17
          Risk........................................................
Item 8.   Financial Statements and Supplementary Data.................    18
          Independent Auditors' Report................................    19
          Consolidated Statement of Operations........................    20
          Consolidated Balance Sheets.................................    21
          Consolidated Statements of Shareholders' Equity.............    22
          Consolidated Statements of Cash Flows.......................    23
          Notes to Consolidated Financial Statements..................    24
Item 9.   Changes and Disagreements with Accountants on Accounting and    38
          Financial Disclosure........................................
                                  PART III
Item 10.  Directors and Executive Officers of the Registrant..........    38
Item 11.  Executive Compensation......................................    38
Item 12.  Security Ownership of Certain Beneficial Owners and             38
          Management..................................................
Item 13.  Certain Relationships and Related Transaction...............    38
                                  PART IV
Item 14.  Exhibits, Financial Statement Schedules and Reports on Form     38
          8-K.........................................................
SIGNATURES............................................................    43
EXHIBIT INDEX.........................................................    44
</TABLE>
 
                                        i
<PAGE>   3
 
                                     PART I
 
     This Annual Report on Form 10-K contains certain forward-looking statements
that are based on management's current beliefs, estimates and assumptions
concerning the operations, future results and prospects of Elder-Beerman and the
retail industry in general. All statements that address operating performance,
events or developments that management anticipates will occur in the future,
including statements related to future sales, profits, expenses, income and
earnings per share, future finance and capital market activity, or statements
expressing general optimism about future results, are forward-looking
statements. In addition, words such as "expects," "anticipates," "intends,"
"plans," "believes," "estimates," variations of such words and similar
expressions are intended to identify forward-looking statements.
 
     Actual results may differ materially from those in the forward- looking
statements. Accordingly, there is no assurance that forward-looking statements
will prove to be accurate.
 
     Many factors could affect Elder-Beerman's future operations and results,
such as the following: increasing price and product competition; fluctuations in
consumer demand and confidence; the availability and mix of inventory;
fluctuations in costs and expenses; the effectiveness of advertising, marketing
and promotional programs; weather conditions that affect consumer traffic in
stores; the continued availability and terms of financing; the outcome of
pending and future litigation; and general economic conditions, such as the rate
of employment, inflation and interest rates and the condition of the capital
markets.
 
     Forward-looking statements are subject to the safe harbors created under
the federal securities laws. Elder-Beerman undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise.
 
ITEM 1.  BUSINESS
 
     The Elder-Beerman Stores Corp. ("Elder-Beerman" or the "Company"; except
where the context otherwise requires, references to the "Company" refer to
Elder-Beerman and its subsidiaries, as described below) operates department
stores that sell a wide range of moderate to better branded merchandise,
including women's, men's and children's apparel and accessories, cosmetics, home
furnishings, and other consumer goods. In addition, the Company owns a specialty
shoe store chain and a private label credit card program through its
wholly-owned subsidiaries, The Bee-Gee Shoe Corp. ("Bee-Gee") and The El-Bee
Chargit Corp. ("Chargit"), respectively. Elder-Beerman operates 60 department
stores and two furniture stores, principally in smaller Midwestern markets in
Ohio, West Virginia, Indiana, Illinois, Michigan, Wisconsin, Kentucky and
Pennsylvania, and Bee-Gee operates 56 stores (36 shoe outlets and 20 Shoebilee!
stores), principally in smaller Midwestern markets in Ohio, West Virginia,
Indiana, Illinois, Michigan, Pennsylvania and Virginia. See "Properties." The
Company's operations are diversified by size of store, merchandising character,
and character of the community served. The Company seeks to satisfy the
merchandising needs of its geographic markets, serving customers of all ages
with varied tastes and incomes.
 
GENERAL DEVELOPMENT OF BUSINESS
 
     BACKGROUND
 
     Elder-Beerman and its predecessors have been operating department stores
since 1847. Historically, the Company's underlying strategy had been to achieve
profits through an aggressive approach to (a) containing operating costs, (b)
enhancing gross profits from the sale of merchandise, and (c) expanding its
presence as a regional retailer. This strategy enabled the Company to experience
steady sales growth and consistent earnings results beginning in the mid-1960s
and continuing into the early 1990s. During 1992 and through 1994, the Company
undertook a new and high volume merchandising strategy. During 1995, it became
apparent that this strategy had a negative impact on the Company's financial
position, and the Company entered into negotiations with its lenders for a plan
to provide additional liquidity. These negotiations ultimately were
unsuccessful. In addition, as the need for working capital to fund increased
inventory purchases for the holiday season drew closer, Elder-Beerman's
suppliers began to show concerns about further extensions of trade credit to the
Company in the wake of other bankruptcies in the retail industry. The
<PAGE>   4
 
Company was faced with an absence of working capital financing and the prospect
of being unable to secure inventory for the 1995 Christmas season.
 
     CHAPTER 11 CASE
 
     On October 17, 1995, Elder-Beerman and its subsidiaries, Chargit, Bee-Gee,
Margo's LaMode, Inc. ("Margo's"), McCook Wholesale Corp., E-B Community Urban
Redevelopment Corp. and EBA, Inc. , filed voluntary petitions for relief (the
"Reorganization Cases") under chapter 11 of the United States Bankruptcy Code,
as amended (the "Bankruptcy Code"), with the United States Bankruptcy Court for
the Southern District of Ohio, Western Division (the "Bankruptcy Court"). The
Old Elder-Beerman Companies filed their proposed joint plan of reorganization
with the Bankruptcy Court on August 6, 1997, which was subsequently amended (the
"Plan"). The Bankruptcy Court entered an order on December 16, 1997 confirming
the Plan. The Plan became effective on December 30, 1997.
 
BUSINESS
 
     The Company sells a wide range of merchandise, including women's, men's,
and children's apparel and accessories, cosmetics, home furnishings and other
consumer goods. In addition, as discussed above, the Company owns a shoe store
chain and a private label credit card program through its wholly-owned
subsidiaries, Bee-Gee and Chargit, respectively. The Company's historical
competitive advantage is its niche in medium and small size cities, and in many
cases, Elder-Beerman is the dominant supplier of moderate to better brands of
soft goods (e.g., Liz Claiborne, Estee Lauder, Tommy Hilfiger, Polo, Guess) in
such markets. In many of these cities, there is only one shopping mall, and the
Company is a main department store anchor along with J.C. Penney, Sears, or a
discount retailer such as Kmart. These other anchors generally supply moderate
private label goods, which typically complement the Company's more upscale and
largely branded merchandise. The Company's strong metropolitan rivals have
tended to bypass smaller midwestern cities, leaving Elder-Beerman as the
dominant department store in these smaller markets.
 
     The Company's business strategy is to improve profitability by focusing on
a more productive core department store business, primarily in Dayton, Ohio and
smaller communities in the Midwest. The Company seeks to be the dominant
destination retailer in its markets for fashion apparel, accessories, cosmetics,
shoes, and home accessories for the entire family, while continuing its
tradition of providing strong customer service. In addition, the Company
aggressively uses technology and business process changes to reduce operating
costs and improve operating performance through productivity gains.
 
     The Company's long-term business plan is designed to accomplish its
strategy by (a) focusing on its traditional strengths as the major retailer in
its markets; (b) emphasizing major vendor partnerships to improve sales and
margins while improving supply chain integration and efficiencies; (c) competing
with traditional department store competitors through emphasis on customer
service, timely and broad product assortments, and competitive pricing and
promotions in appropriate markets and product areas; (d) competing with moderate
department stores and discounters through merchandise breadth and advantages in
branded and gift areas; (e) focusing price/product competition in key basic
merchandising areas; and (f) leveraging technology to create a selling culture
with "customer-focused" stores, to develop and execute customer and market
specific marketing programs, and to distribute, price, and promote goods by
market.
 
     MERCHANDISING
 
     The Company carries a broad assortment of goods to provide fashion,
selection and variety found in leading department stores that feature better
merchandise brands. Although all stores stock identical core assortments,
specific types of goods are distributed to stores based on the particular
characteristic of the local market. The Company emphasizes "signature" areas
critical to its image in its niche market, as a primary destination for fashion
apparel, cosmetics and gifts. In addition, through continued efforts to develop
a partnership with its most significant vendors, the Company is using technology
and focused merchandising and distribution to reduce material handling costs and
increase speed in moving stock from the vendor to the selling floor.
 
                                        2
<PAGE>   5
 
     Certain departments in Elder-Beerman's department stores are leased to
independent third parties. These leased departments, which include the fine
jewelry, beauty salon, watch repair, millinery and maternity departments,
provide high quality service and merchandise where specialization and expertise
are critical and the Company's direct participation in the business is not
economically justifiable. Leased department sales are included in
Elder-Beerman's total sales. Management regularly evaluates the performance of
the leased departments and requires compliance with established customer service
guidelines.
 
     Bee-Gee operates two distinct discount footwear formats that are
differentiated by varying degrees of fashion, value and convenience. The
Company's 36 El-Bee Shoe stores offer primarily close-out and special purchase
budget footwear styles for women, men and children in a self-service, open-box
rack format. The 20 Shoebilee! family footwear stores offer national brands in
an updated shopping environment where moderate assortments are merchandised by
lifestyle and classification rather than by size and gender. Merchandise is
presented in a self-select caseline format and is promoted through a
value-priced promotional program. The Company is in the process of converting
several El-Bee Shoe stores to the newer Shoebilee! format. Many Bee-Gee stores
are positioned near existing Elder-Beerman stores to leverage credit marketing
and cross-shopping opportunities.
 
     For the 52 weeks ending January 30, 1999 ("Fiscal 1998"), the 52 weeks
ending January 31, 1998 ("Fiscal 1997") and the 53 weeks ending February 1, 1997
("Fiscal 1996"), the Company's department store percentages of net sales by
major merchandise category were as follows:
 
                         THE ELDER-BEERMAN STORES CORP.
                           RETAIL SALES BY DEPARTMENT
 
<TABLE>
<CAPTION>
MERCHANDISE CATEGORY                                            1998     1997     1996
--------------------                                            -----    -----    -----
                                                                  %        %        %
<S>                                                             <C>      <C>      <C>
Women's Ready to Wear.......................................     33.1     34.0     33.2
Accessories, Shoes & Cosmetics..............................     22.6     21.7     21.6
Men's & Children's..........................................     24.0     24.3     25.1
Home Store..................................................     20.3     20.0     20.1
                                                                -----    -----    -----
TOTAL RETAIL................................................    100.0    100.0    100.0
                                                                =====    =====    =====
</TABLE>
 
     PRICING
 
     All pricing decisions are made at the Company's corporate headquarters. The
Company's pricing strategy is designed to provide superior quality and value
appeal by offering competitive prices on fashion from premier national brands.
The Company has effectively been able to generate sales from promotions with
special pricing of limited duration. The Company's management information
systems provide timely sales and gross margin reports that identify sales and
gross margins by item and by store and provide management with the information
and flexibility to adjust prices and inventory levels as necessary.
 
     PURCHASING AND DISTRIBUTION
 
     During Fiscal 1998, the Company purchased merchandise from over 1,000
domestic and foreign manufacturers and suppliers. During that period, the top 25
vendors by dollar volume accounted for approximately 41% of net purchases. In
Fiscal 1998, the Company also purchased approximately 8% of its merchandise,
primarily private label merchandise, through Frederick Atkins, Inc. ("Atkins"),
a national association of major retailers that provides its members with group
purchase opportunities. Management believes it has good relationships with its
suppliers. No other vendor accounted for more than 5% of the Company's
purchases. The Company believes that alternative sources of supply are available
for each category of merchandise it purchases.
 
     Merchandise is generally shipped from vendors, through three consolidation
points, to the Company's distribution center in Dayton, Ohio. Deliveries are
made from the distribution center to each store two to
 
                                        3
<PAGE>   6
 
seven times per week depending on the store size and the time of year. A
majority of the merchandise is shipped ready for immediate placement on the
selling floor.
 
     INFORMATION SYSTEMS
 
     The Company places great emphasis on its management information systems.
Currently, the Company's merchandising activities are controlled by a series of
on-line systems, including a point-of-sale and sales reporting system, a
purchase order management system, a receiving system and a merchandise planning
system. These integrated systems track merchandise from the order stage through
the selling stage and provide valuable sales performance information for
management.
 
     The Company is presently further enhancing its management information
systems, through capital investment and training programs, to (a) improve the
data integrity of financial and merchandise systems and (b) improve merchandise
analysis and decision making.
 
     MARKETING
 
     The Company's marketing and advertising functions are centralized at its
corporate headquarters and, for the department stores, are focused on
communicating a timely and broad offering of premier branded merchandise, a
strong quality/value relationship and outstanding customer service. The Company
employs comprehensive, multimedia advertising programs including print and
broadcast as well as creative in-store displays, signage and special promotions.
The Company distributes sale catalogs utilizing insertion in Sunday and weekday
newspapers as well as direct mail to preferred charge customers. Catalogs are
supplemented by additional newspaper advertising to support sale events as
scheduled. The Company also uses television and radio in markets where it is
productive and cost efficient. Marketing activities for Bee-Gee are limited
primarily to newspaper, radio, coupons and in-store displays emphasizing price,
seasonal assortments and special promotions.
 
     CREDIT CARD PROGRAM
 
     The Company operates a private label credit card program through its
wholly-owned subsidiary, Chargit. During Fiscal 1998, the Company issued 213,000
Elder-Beerman credit cards for newly opened accounts and had approximately
702,000 Elder-Beerman active credit card accounts during Fiscal 1998. The
Company has made a significant investment in its credit card program since it
believes that Elder-Beerman credit card holders generally constitute the
Company's most loyal and active customers. Elder-Beerman credit card holders
shop more frequently with the Company and generally purchase more merchandise
than customers who pay with cash or third-party credit cards. During Fiscal
1998, approximately 43% of Elder-Beerman's total sales were private label credit
card sales. Cash sales and third party credit cards accounted for 33% and 24% of
sales, respectively. Frequent use of the Elder-Beerman credit card by customers
is an important element in the Company's marketing and growth strategies. The
Company also seeks to increase the use of its private label credit card through
incremental sales or shifting sales from other credit cards and other retailers,
and by attracting new cardholders.
 
     All phases of the credit card operation are handled by Chargit except the
processing of customer mail payments, which is performed pursuant to a retail
lockbox agreement with a bank. Decisions whether to issue a credit card to an
applicant are made on the basis of a credit scoring system.
 
     CUSTOMER SERVICE
 
     Elder-Beerman has a strong tradition of providing quality customer service.
The Company is presently enhancing its customer service image and creating a
customer-oriented store environment by (a) eliminating nonselling activities
from stores; (b) using training and recruiting practices to instill a culture of
customer helpfulness, friendliness and responsiveness; and (c) developing tools
and training to enhance selling skills and awareness.
 
                                        4
<PAGE>   7
 
     EXPANSION
 
     The Company is currently implementing a controlled expansion of new stores
in markets having characteristics consistent with the Company's current markets.
The Company believes that sufficient new locations are available in markets
within or contiguous to the Company's current area of operations to support such
an expansion. In addition, the Company believes that opportunities exist to
expand existing stores where current space constraints prevent adequate
presentation of certain core merchandise departments.
 
     In July 1998, the Company relocated its Southtowne Shopping Center store in
Dayton, Ohio from a 132,000 square foot standalone site to a 212,000 square foot
anchor store in the Dayton Mall. In September 1998, the Company opened a 120,000
square foot mall anchor store in Erie, Pennsylvania. Additionally, during 1998,
the Company relocated its VanBuren store in Dayton, Ohio to a newer store
located 2 miles away and completed expansions at its Columbus, Indiana and
Heath, Ohio stores. During 1997, the Company expanded its Monroe, Michigan,
Muncie, Indiana and Findlay, Ohio stores.
 
     ACQUISITIONS
 
     On July 27, 1998, the Company acquired Stone & Thomas for a purchase price
of approximately $20.2 million in cash, plus the assumption of long term debt of
$17.6 million, subject to postclosing adjustments. Stone & Thomas operated 20
department stores located in West Virginia, Ohio, Kentucky and Virginia under
the name Stone & Thomas. The acquisition has been accounted for as a purchase.
The Company sold seven of the former Stone & Thomas locations and closed two
more of the locations that did not fit its business strategy.
 
     SEASONALITY
 
     The department store business is seasonal, with a high proportion of sales
and operating income generated in November and December. Working capital
requirements fluctuate during the year, increasing somewhat in mid-summer in
anticipation of the fall merchandising season and increasing substantially prior
to the Christmas holiday season when the Company must carry significantly higher
inventory levels. Consumer spending in the peak retail season may be affected by
many factors outside the Company's control including competition, consumer
demand and confidence, weather that affects consumer traffic and general
economic conditions. A failure to generate substantial holiday season sales
could have a material adverse effect on the Company.
 
     COMPETITION
 
     The retail industry in general and the department store and shoe store
businesses in particular are intensely competitive. Generally, the Elder-Beerman
department stores and Bee-Gee shoe stores are in competition not only with other
department stores and family shoe stores, respectively, in their geographic
markets, but also with numerous other types of retail outlets, including
specialty stores, general merchandise stores, off-price and discount stores and
manufacturer outlets. Some of the retailers with which the Company competes have
substantially greater financial resources than the Company and may have other
competitive advantages over the Company. The Elder-Beerman department stores
compete on the basis of quality, depth and breadth of merchandise, prices for
comparable quality merchandise, customer service and store environment. The
Bee-Gee shoe stores compete primarily on the basis of price and convenience.
 
     ASSOCIATES
 
     On January 30, 1999, the Company had approximately 8,830 regular and
part-time employees, approximately 8,353 of which are employed by
Elder-Beerman's department stores. Because of the seasonal nature of the retail
business, the number of employees rises to a peak in the holiday season. None of
the Company's associates are represented by a labor union. The Company's
management considers its relationships with its associates to be satisfactory.
 
                                        5
<PAGE>   8
 
ITEM 2.  PROPERTIES
 
     Elder-Beerman currently operates 60 department stores and two furniture
stores, principally in smaller midwestern markets in Ohio, West Virginia,
Indiana, Illinois, Michigan, Wisconsin, Kentucky and Pennsylvania, and Bee-Gee
operates 56 stores (36 shoe outlets and 20 Shoebilee! stores), principally in
smaller Midwestern markets in Ohio, West Virginia, Indiana, Illinois, Michigan,
Pennsylvania and Virginia. Substantially all of the Company's stores are leased
properties. The Company owns, subject to a mortgage, a 302,570 square foot
office/warehouse facility located in Dayton, Ohio, which serves as its principal
executive offices.
 
     The following table sets forth certain information with respect to
Elder-Beerman's department store locations and Bee-Gee's shoe store locations,
operating as of January 30, 1999, the end of Elder-Beerman's and Bee-Gee's most
recently completed fiscal year:
 
                         THE ELDER-BEERMAN STORES CORP.
 
                            STORE SUMMARY BY REGION
 
<TABLE>
<CAPTION>
                                                                     TOTAL       DATE
     STATE/CITY                        LOCATION                   SQUARE FEET   OPENED   OWN/LEASE
---------------------   ---------------------------------------   -----------   ------   ---------
<S>                     <C>                                       <C>           <C>      <C>
OHIO
Athens                  University Mall                              42,829     09/88      Lease
Bowling Green           Woodland Mall                                40,700     04/87      Lease
Chillicothe             Chillicothe Mall                             55,940     05/81      Lease
                        Home Store                                   17,609     11/90      Lease
Cincinnati              Forest Fair Mall                            149,462     04/89      Lease
Dayton                  Centerville Place                           191,400     08/66      Lease
Dayton                  Fairfield Commons                           151,740     10/93      Lease
Dayton                  Southtowne Furniture                        121,000     01/76      Lease
Dayton                  Northwest Plaza                             217,060     02/66      Lease
Dayton                  Courthouse Plaza                            125,390     11/75      Lease
Dayton                  Dayton Mall                                 212,000     07/98      Lease
Dayton                  Salem Furniture                             124,987     11/72        Own
Dayton                  Kettering Town Center                        82,078     10/98      Lease
Dayton                  Northpark Center                            101,840     10/94      Lease
Defiance                Northtowne Mall                              48,000     04/86      Lease
Fairborn                Distribution Center                         300,000     12/90      Lease
Findlay                 Findlay Village Mall                         74,825     07/90      Lease
Franklin                Middletown (Towne Mall)                     118,000      1977        Own
Hamilton                Hamilton                                    167,925     04/74      Lease
Heath                   Indian Mound Mall                            73,695     09/86      Lease
Lancaster               River Valley Mall                            52,725     09/87      Lease
Lima                    Lima Mall                                   103,350     11/65      Lease
Marion                  Southland Mall                               74,621     11/84      Lease
Moraine                 Corporate Offices                           302,570     06/70        Own
New Philadelphia        New Towne Mall                               52,648     10/88      Lease
Piqua                   Miami Valley Center                          59,092     09/88      Lease
Sandusky                Sandusky Mall                                38,773     03/83      Lease
Springfield             Upper Valley Mall                            71,868     10/92      Lease
St. Clairsville         Ohio Valley Mall                             66,545     07/98      Lease
Toledo                  Woodville                                   100,000     08/85      Lease
</TABLE>
 
                                        6
<PAGE>   9
                         THE ELDER-BEERMAN STORES CORP.
 
                        STORE SUMMARY BY REGION (CONT'D)
 
<TABLE>
<CAPTION>
                                                                     TOTAL       DATE
     STATE/CITY                        LOCATION                   SQUARE FEET   OPENED   OWN/LEASE
---------------------   ---------------------------------------   -----------   ------   ---------
<S>                     <C>                                       <C>           <C>      <C>
Toledo                  Westgate                                    154,000     08/85      Lease
Wooster                 Wayne Towne Plaza                            53,689      6/94      Lease
Zanesville              Colony Square                                70,346     09/85        Own
WEST VIRGINIA
Beckley                 Raleigh Mall                                 50,210     07/98      Lease
Bridgeport              Meadowbrook Mall                             70,789     07/98      Lease
                        Home Store                                   74,723     07/98      Lease
Charleston              Charleston Town Center                       31,687     07/98      Lease
Huntington              Huntington Mall                              75,640     07/98      Lease
Kanawha City            Kanawha Mall                                 41,270     07/98      Lease
Morgantown              Morgantown Mall                              70,790     09/90      Lease
Morgantown              Mountaineer Mall                             70,470     07/98      Lease
Vienna                  Grand Central Mall                          106,000     07/98      Lease
Wheeling                Wheeling                                    183,000     07/98        Own
Winfield                Liberty Square Center                        40,824     07/98      Lease
INDIANA
Anderson                Mounds Mall                                  66,703     07/81      Lease
Columbus                Columbus Mall                                73,446     02/90      Lease
Elkhart                 Concord Mall                                104,000     11/85      Lease
Evansville              Washington Square Mall                      134,536     10/93      Lease
Kokomo                  Kokomo Mall                                  75,704     10/87      Lease
Marion                  North Park Mall                              55,526     11/78      Lease
Muncie                  Muncie Mall                                  80,000     10/97      Lease
Muncie                  Home Store                                   22,912     10/89      Lease
Richmond                Downtown                                    100,000     08/74      Lease
Terre Haute             Honey Creek Mall                             70,380     08/73      Lease
MICHIGAN
Adrian                  Adrian Mall                                  54,197     08/87      Lease
Benton Harbor           The Orchards Mall                            70,428     10/92      Lease
Jackson                 Westwood Mall                                70,425     09/93      Lease
Midland                 Midland Mall                                 64,141     10/91      Lease
Monroe                  Frenchtown Square                            99,219     04/88      Lease
Muskegon                Lakeshore Marketplace                        87,185     10/95      Lease
ILLINOIS
Danville                Village Mall                                 77,300     07/86      Lease
Mattoon                 Cross Country Mall                           54,375     03/78      Lease
WISCONSIN
Beloit                  Beloit Mall                                  62,732     10/93      Lease
Green Bay               Bay Park Square Mall                         75,000     09/95      Lease
KENTUCKY
Ashland                 Cedar Knolls Galleria                        70,000     07/98      Lease
Paducah                 Kentucky Oaks Mall                           60,092     08/82      Lease
PENNSYLVANIA
Erie                    Millcreek Mall                              119,800      9/98      Lease
</TABLE>
 
                                        7
<PAGE>   10
 
                             THE BEE-GEE SHOE CORP.
 
                            STORE SUMMARY BY REGION
 
<TABLE>
<CAPTION>
                                                                     TOTAL       DATE
     STATE/CITY                        LOCATION                   SQUARE FEET   OPENED   OWN/LEASE
---------------------   ---------------------------------------   -----------   ------   ---------
<S>                     <C>                                       <C>           <C>      <C>
OHIO
Athens                  University Mall                              3,600      11/88      Lease
Centerville             Centerville                                  6,938      11/94      Lease
Chillicothe             Chillicothe Mall                             3,600      10/85      Lease
Cincinnati              Western Hills Shopping Center                7,800      08/91      Lease
Cincinnati              Colerain Hills                               4,500      08/72      Lease
Dayton                  Sugar Creek Plaza                            3,200      03/90      Lease
Dayton                  Southtowne Shopping Center                  10,000      08/74        Own
Dayton                  Northwest Plaza                              4,400      03/76      Lease
Defiance                Northtowne Mall                              6,650      03/91      Lease
East Liverpool          Summit Square Shopping Center                3,600      08/91      Lease
Englewood               Northmont Plaza                              4,200      12/72      Lease
Fairfield               Forest Fair Mall                             5,172      02/89      Lease
Findlay                 Flag City Station                            5,900      08/91      Lease
Greenville              Buckeye Square                               3,000      11/83      Lease
Heath                   Indian Mound Mall                            3,319      09/91      Lease
Huber Heights           North Park Center                            6,700      11/94      Lease
Lancaster               River Valley Mall                            3,106      08/91      Lease
Lima                    Clocktower Shopping Center                   3,200      04/92      Lease
Marion                  Southland Mall                               4,392      11/97      Lease
Middletown              Eastgate Shopping Center                     3,500      10/85      Lease
New Philadelphia        New Towne Mall                               3,621      08/91      Lease
Piqua                   Miami Valley Mall                            3,075      09/88      Lease
Sandusky                Park Place                                   3,705      05/91      Lease
Springfield             Springfield Mall                             3,000      04/93      Lease
St. Mary's              St. Mary's Shopping Center                   3,200      08/94      Lease
Streetsboro             Streetsboro Market Shopping Center           6,890      09/95      Lease
Tiffin                  Tiffin Mall                                  6,576      07/84      Lease
Toledo                  Spring Meadows Shopping Center               6,000      05/87      Lease
Troy                    Troy Town Center                             3,892      08/90      Lease
Westerville             Westerville Shopping Center                  3,750      11/71      Lease
Wooster                 Wayne Towne Plaza                            3,150      07/92      Lease
Xenia                   Xenia Towne Square                           3,500      08/85      Lease
Zanesville              Colony Square                                5,571      11/85      Lease
INDIANA
Clarksville             River Falls Mall                             6,000      09/98      Lease
Columbus                Fair Oaks Mall                               3,730      08/90      Lease
Elkhart                 Concord Mall                                 6,340      09/90      Lease
Kokomo                  Markland Mall                                5,000      05/88      Lease
Logansport              Logansport Mall                              3,600      04/90      Lease
Plymouth                Pilgrim Place                                3,367      05/90      Lease
Richmond                Richmond Square Mall                         5,450      10/97      Lease
South Bend              Scottsdale Mall                              4,770      05/83      Lease
Warsaw                  Marketplace                                  3,000      11/86      Lease
</TABLE>
 
                                        8
<PAGE>   11
                             THE BEE-GEE SHOE CORP.
 
                        STORE SUMMARY BY REGION (CONT'D)
 
<TABLE>
<CAPTION>
                                                                     TOTAL       DATE
     STATE/CITY                        LOCATION                   SQUARE FEET   OPENED   OWN/LEASE
---------------------   ---------------------------------------   -----------   ------   ---------
<S>                     <C>                                       <C>           <C>      <C>
ILLINOIS
Huntley                 Huntley Outlet Center                        5,000      11/95      Lease
Mattoon                 Cross County Mall                            4,175      08/92      Lease
Peru                    Peru Mall                                    3,129      11/92      Lease
Springfield             Capital City Shopping Center                 4,050      05/88      Lease
PENNSYLVANIA
Grove City              Grove City Outlet                            4,520      11/94      Lease
Pittsburgh              Robinson Towne Center                        3,500      08/89      Lease
MICHIGAN
Battle Creek            Lakeview Square Mall                         5,452      08/98      Lease
Bay City                Bay City Mall                                4,422      04/98      Lease
Kalamazoo               Maple Hill Mall                              2,850      03/87      Lease
Lansing                 Lansing Mall                                 5,295      08/98      Lease
Mt. Pleasant            Indian Hills Plaza                           3,200      08/90      Lease
Midland                 Midland Mall                                 5,419      10/98      Lease
WEST VIRGINIA
Vienna                  Vienna                                       3,750      04/76      Lease
VIRGINIA
Harrisonburg            Valley Mall                                  3,078      09/84      Lease
</TABLE>
 
ITEM 3.  LEGAL PROCEEDINGS
 
     The Company is involved in several legal proceedings arising from its
normal business activities and reserves have been established where appropriate.
Management believes that none of these legal proceedings will have a material
adverse effect on the financial condition, results of operations or cash flows
of the Company.
 
     In addition, as a result of the Reorganization Cases, the Company remains
subject to the jurisdiction of the Bankruptcy Court for matters relating to the
consummation of the Plan.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     None.
 
EXECUTIVE OFFICERS OF THE REGISTRANT
 
     Frederick J. Mershad has served as Chairman of the Board of Elder-Beerman
since December 1997, as Chief Executive Officer of Elder-Beerman since January
1997 and as President of Elder-Beerman from January 1997 to December 1997. Prior
to this time, Mr. Mershad served as President and Chief Executive Officer of the
Proffitt's division of Saks, Inc. ("Proffitt's") from February 1995 to December
1996; Executive Vice President, Merchandising Stores for Proffitt's from May
1994 to January 1995; Senior Vice President, General Merchandise Manager, Home
Store for the Rich's Department Stores division of Federated Department Stores,
Inc. ("Federated") from August 1993 to May 1994; and Executive Vice President,
Merchandising and Marketing of the McRae's Department Stores division of
Proffitt's from June 1990 to August 1993. Mr. Mershad is 56 years old.
 
     John A. Muskovich has served as President, Chief Operating Officer and a
Director of Elder-Beerman since December 1997 and served as Executive Vice
President of Administration of Elder-Beerman from February 1996 to December
1997. In addition, Mr. Muskovich served as Chief Financial Officer from
 
                                        9
<PAGE>   12
 
December 1997 through March 1999. Prior to this time, Mr. Muskovich served as
Director of Business Process for Kmart Corp. from September 1995 to February
1996; President of the Federated Claims Services Group with Federated from
February 1992 to August 1995; Vice President of Benefits of Federated from 1994
to 1995; and Vice President, Corporate Controller of Federated from 1988 to
1992. Mr. Muskovich is 52 years old.
 
     James M. Zamberlan has served as Executive Vice President, Stores of
Elder-Beerman since July 1997. Prior to this time, Mr. Zamberlan served as
Executive Vice President of Stores for Bradlee's, Inc. from September 1995 to
January 1997 and also served as Senior Vice President of Stores for the Lazarus
Division of Federated from November 1989 to August 1995. Mr. Zamberlan is 52
years old.
 
     Scott J. Davido was appointed to the position of Executive Vice President,
Chief Financial Officer and Treasurer in March 1999 and served as Senior Vice
President, General Counsel and Secretary of Elder-Beerman from January 1998
through March 1999. Prior to this time, Mr. Davido was a partner with Jones,
Day, Reavis & Pogue, a law firm, since December 1996, and was employed as an
associate with the firm since September 1987. Mr. Davido is 37 years old.
 
     Steven D. Lipton has served as Senior Vice President, Controller of
Elder-Beerman since March 1996. Prior to this time, Mr. Lipton served as
Operating Vice President of Payroll for Federated Financial & Credit Services
from September 1994 to January 1996 and served as Vice President and Controller
of the Lazarus Division of Federated from February 1990 to August 1994. Mr.
Lipton is 47 years old.
 
                                       10
<PAGE>   13
 
                                    PART II
 
ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
     The Company's common stock, without par value, (the "Common Stock") is
listed on the Nasdaq Stock Market ("NASDAQ") and is designated a NASDAQ/National
Market System Security trading under the symbol EBSC.
 
     The number of shareholders of record as of April 13, 1999 was 2,046.
 
     No dividends have been paid on the Common Stock. The Company intends to
reinvest earnings in the Company's business to support its operations and
expansion. The Company has no present intention to pay cash dividends in the
foreseeable future, and will determine whether to declare dividends in the
future in light of the Company's earnings, financial condition and capital
requirements. In addition, the Company has certain credit agreements that limit
the payment of dividends.
 
     The Company issued Common Stock and a Series A Warrant and a Series B
Warrant, each convertible into Common Stock, pursuant to the Plan in
satisfaction of certain allowed claims against, or interests in, the Company in
the Reorganization Cases. Based upon the exemptions provided by section 1145 of
the Bankruptcy Code, the Company believes that none of these securities are
required to be registered under the Securities Act of 1933 (the "Securities
Act") in connection with their issuance and distribution pursuant to the Plan.
The Company has no recent sales of unregistered securities other than such
issuances pursuant to the Plan.
 
     The Company's high and low stock prices by quarter for Fiscal 1998 are set
forth below:
 
<TABLE>
<CAPTION>
                                                    HIGH        LOW
                                                   -------    -------
<S>                                                <C>        <C>
First Quarter
2/17/98 -- 5/2/98..............................    $27.375    $14.000
Second Quarter
5/3/98 -- 8/1/98...............................    $29.375    $21.750
Third Quarter
8/2/98 -- 10/3/98..............................    $23.813    $ 8.250
Fourth Quarter
11/1/98 -- 1/30/99.............................    $15.375    $ 8.250
</TABLE>
 
                                       11
<PAGE>   14
 
ITEM 6.  SELECTED HISTORICAL FINANCIAL DATA
 
     The following table sets forth various selected financial information for
the Company as of and for the fiscal years ended January 30, 1999, January 31,
1998, February 1, 1997, February 3, 1996 and January 28, 1995. Such selected
consolidated financial information should be read in conjunction with the
consolidated financial statements of the Company, including the notes thereto,
set forth in Item 8 of this Form 10-K and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" set forth in Item 7 of this
Form 10-K.
 
<TABLE>
<CAPTION>
                                                                  FISCAL YEAR ENDED
                                      --------------------------------------------------------------------------
                                      JAN 30, 1999   JAN 31, 1998   FEB 1, 1997   FEB 3, 1996 (A)   JAN 28, 1995
                                      ------------   ------------   -----------   ---------------   ------------
                                                     DOLLARS IN THOUSANDS (EXCEPT PER SHARE DATA)
<S>                                   <C>            <C>            <C>           <C>               <C>
CONSOLIDATED STATEMENT OF OPERATIONS
  DATA
Total Revenues......................    $657,993       $607,946      $597,008        $608,931         $647,326
Income/(Loss) Before Reorganization
  Items and Income Tax Expense
  (Benefit).........................      20,787         11,931        11,579         (33,631)          (4,590)
Reorganization Items................      (1,318)        27,542        23,648          19,711
Income/(Loss) Before Extraordinary
  Items and Discontinued
  Operations (b) (c)................      25,461         (8,199)      (12,429)        (51,010)          (2,064)
Net Income / (Loss).................    $ 25,461       $(28,952)     $(12,429)       $(63,286)        $(13,355)
Diluted Earnings/(Loss) Per
  Common Share:
  Continuing Operations.............    $   1.76       $  (6.58)     $(100.20)       $(411.25)        $ (16.64)
  Preferred Stock Dividend..........                                                                     (7.43)
  Discontinued Operations...........                       5.92                        (98.97)          (91.03)
  Extraordinary Items...............                     (22.58)
                                        --------       --------      --------        --------         --------
     Net Earnings/(Loss)............    $   1.76       $ (23.24)     $(100.20)       $(510.22)        $(115.10)
                                        ========       ========      ========        ========         ========
Cash Dividends Paid:
  Common............................    $              $             $               $                $  11.55
  Preferred.........................    $              $             $               $                $   1.39
BALANCE SHEET DATA
Total Assets........................    $453,959       $371,365      $368,609        $367,069         $267,822
Short-Term Debt.....................         951          1,105        57,931          50,100            6,221
Liabilities Subject to Compromise...                                  231,675         229,409
Long-Term Obligations...............     121,507        142,024         5,669           3,100          109,487
OTHER DATA
Sales Increase/(Decrease) From
  Prior Period......................        8.8%           2.1%         (3.5%)          (6.5%)
Dept. Store Comp. Sales Inc./(Dec.)
  From Prior Period (d).............        4.1%           3.7%         (1.2%)          (8.4%)
</TABLE>
 
---------------
 
Notes to Selected Historical Financial Data:
 
(a) Fiscal Year ended February 3, 1996 included 53 weeks as compared to 52 weeks
    for each of the other fiscal years shown.
 
(b) The financial information for Margo's is included in discontinued operations
    for all periods.
 
(c) The financial information for Bee-Gee is included as part of continuing
    operations for all periods except for the initial reserve for discontinued
    operations that was recorded in Fiscal 1994 and the subsequent reversal
    recorded in Fiscal 1995.
 
(d) Comparable store sales include only those department stores that operated
    during the applicable full fiscal year, and has been adjusted for
    elimination of complete product lines.
 
                                       12
<PAGE>   15
 
SELECTED QUARTERLY FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                                                   FISCAL 1998
                                        ------------------------------------------------------------------
                                        FIRST QUARTER    SECOND QUARTER    THIRD QUARTER    FOURTH QUARTER
                                        -------------    --------------    -------------    --------------
                                                   DOLLARS IN THOUSANDS (EXCEPT PER SHARE DATA)
<S>                                     <C>              <C>               <C>              <C>
CONSOLIDATED STATEMENT OF OPERATIONS
  DATA
Total Revenues......................      $133,222          $131,641         $163,015          $230,115
Income/(Loss) Before Reorganization
  Items and Income Tax Expense
  (Benefit).........................          (710)              392            2,944            18,161
Reorganization Items................                                                             (1,318)
Income/(Loss) Before Extraordinary
  Items and Discontinued
  Operations........................          (436)              239            1,825            23,833
Net Income/(Loss)...................      $   (436)         $    239         $  1,825          $ 23,833
Diluted Earnings/(Loss) Per Common
  Share:............................      $   (.03)         $    .02         $    .11          $   1.51
</TABLE>
 
ITEM 7.  MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 
     The following is a discussion of the financial condition and results of
operations of the Company for Fiscal 1998, Fiscal 1997 and Fiscal 1996. The
Company's fiscal year ends on the Saturday closest to January 31. The discussion
and analysis that follows is based upon and should be read in conjunction with
the Company's Consolidated Financial Statements and the notes thereto included
in Item 8.
 
RESULTS OF OPERATIONS
 
     FISCAL 1998 COMPARED TO FISCAL 1997
 
     Net sales for Fiscal 1998 increased by 8.8% to $632.4 million from $581.4
million for Fiscal 1997. The increase is due to a 4.1% comparative sales
increase for the department store division, and a 0.1% comparative sales
decrease for the Bee-Gee Shoe division. The department store comparable sales
results include the relocated Dayton Mall flagship store. In addition, the
department stores acquired from Stone & Thomas generated $44.7 million in sales
during the second half of 1998. Women's and men's better sportswear, furniture,
intimate apparel, cosmetics and shoes led the sales increase for the department
stores.
 
     Financing revenue from the Company's private label credit card for Fiscal
1998 decreased by 3.8% to $25.6 million from $26.6 million for Fiscal 1997. The
decline in finance charges is due to a reduction in outstanding customer
accounts receivable, not including the Stone & Thomas customer accounts
receivable portfolio purchased November 23, 1998, and has been partially offset
by an increase in late fees charged.
 
     Cost of goods sold, occupancy, and buying expenses decreased to 71.2% of
net sales for Fiscal 1998 from 72.9% of net sales for Fiscal 1997. This decrease
is primarily due to a charge last year of $5.6 million to record excess
markdowns related to two department store closings versus $1.2 million this year
related to moving two department stores and closing 11 shoe stores. In Fiscal
1998, the LIFO inventory valuation adjustment reduced cost of goods sold by $5.8
million compared to a decrease of $1.4 million in Fiscal 1997. In addition,
there was improved gross margin performance, which was partially offset by an
increase in the buying staff as a result of being more fully staffed, and an
increase in depreciation due to capital expenditures in 1998.
 
     Selling, general, and administrative (including key employee performance
bonus plan expense) and hiring and recruiting expenses for new executives
decreased to 26.7% of net sales for Fiscal 1998 from 27.1% for Fiscal 1997. This
was due to a reduction in the Company's store selling and customer services
expenditures and modification to the Company's fringe benefit plans.
 
     Provision for doubtful accounts decreased to 0.8% of net sales for Fiscal
1998 from 1.5% for Fiscal 1997. This improvement is due to fewer write-offs of
delinquent customer accounts and fewer personal bankruptcies affecting the
Company.
 
                                       13
<PAGE>   16
 
     Interest expense increased to $11.8 million for Fiscal 1998 from $7.1
million for Fiscal 1997. The increase is due to the additional financing
required to support the payment of bankruptcy obligations in connection with the
consummation of the Company's chapter 11 plan of reorganization and the
acquisition of Stone & Thomas, offset by a reduction resulting from the
Company's issuance of 3,220,000 shares of additional Common Stock. See
" Liquidity and Capital Resources."
 
     Other income increased to $3.3 million for Fiscal 1998 compared to other
income of $0.7 million for Fiscal 1997. The income in 1998 was gains realized
from the sale of the Company's 20% limited partnership interest in a partnership
that owned the Company's 300,000 square foot distribution center, and the sale
of the Southtown department store building. The income in Fiscal 1997 was
realized from interest income recorded due to a federal income tax refund,
partially offset by a mark-to-market adjustment on the unhedged portion of swap
agreements in place at that time.
 
     On July 27, 1998 the Company purchased Stone & Thomas, a department store
retailer based in Wheeling, West Virginia. The acquisition and integration
expenses of $4.2 million incurred during Fiscal 1998 are nonrecurring and relate
to interim financing for the purchase transaction as well as other integration
expenses.
 
     Reorganization income for Fiscal 1998 was $1.3 million versus an expense of
$27.5 million for Fiscal 1997. The Company emerged from bankruptcy protection in
December 1997; however, a favorable settlement of bankruptcy related claims
accrued at the end of Fiscal 1997 occurred in the fourth quarter of 1998.
 
     In Fiscal 1998, federal, state, and city income tax expense was based on
the Company's taxable income reduced by the applicable net operating loss
carryforward generated in previous years. The Company also reviewed the status
of its deferred tax asset valuation allowance at the end of the fiscal year and
determined that the valuation allowance should be reduced to reflect the likely
utilization of net operating loss carryforwards to offset taxable income
generated in future years. This resulted in a net income tax benefit being
recorded in Fiscal 1998. In Fiscal 1997, the Company recorded an income tax
benefit based on a taxable loss and an adjustment to the deferred tax asset
valuation allowance. See the Company's Consolidated Financial Statements and the
accompanying notes set forth in Item 8.
 
     FISCAL 1997 COMPARED TO FISCAL 1996
 
     Net sales for Fiscal 1997 increased by 2.1% to $581.4 million from $569.6
million for Fiscal 1996. The increase is due to a 3.7% comparative store sales
increase for the department store division, offset partially by a 2.5%
comparative stores sales decline for the Bee-Gee Shoe outlet division. The
Company closed the outlet section of the Downtown Dayton, Ohio department store,
the Fairborn, Ohio furniture store, and the outlet section of the Hamilton, Ohio
department store, which contributed a combined total of approximately $5.5
million in Fiscal 1996 sales that were absent in Fiscal 1997. In addition, the
Company closed the Northtowne Mall department store located in Toledo, Ohio and
the department store in Carbondale, Illinois in November 1997, and liquidated
the unprofitable electronics product line in December 1997. The Company's
business is subject to seasonal fluctuations. Approximately one-third of the
Company's annual sales occur in the fourth quarter (i.e., November -- January),
as well as a majority of the Company's profits.
 
     Financing revenue from the Company's private label credit card for Fiscal
1997 decreased by 3.2% to $26.6 million from $27.5 million for Fiscal 1996. The
decline is due to a 2.0% decrease in sales attributed to the Company's private
label credit card, and a resulting decline in the outstanding customer accounts
receivable. The decline in finance charges due to outstanding customer accounts
receivable has been partially offset by an increase in late fees charged.
 
     Cost of goods sold, occupancy, and buying expenses increased to 72.9% of
net sales for Fiscal 1997 from 72.0% of net sales for Fiscal 1996. This increase
is due to $5.6 million in excess markdowns in cost of goods due to store
closings in Fiscal 1997. This increase in costs is partially offset by an
increase in the initial rate of mark-up on goods sold coupled with a decrease in
the markdown rate. In Fiscal 1997, the
 
                                       14
<PAGE>   17
 
LIFO inventory valuation adjustment reduced cost of goods sold by $1.4 million
compared to a decrease in cost of goods sold of $1.9 million in Fiscal 1996.
 
     Selling, general, administrative (including key employee performance bonus
plan expense) and hiring and recruiting expenses for new executives decreased by
$5.9 million to $157.4 million for Fiscal 1997 from $163.3 million for Fiscal
1996. This improvement is primarily due to a reduction in payroll and suspension
of ongoing payments on certain computer leases resulting from settlements with
the lessors in which such lessors received claims in the Reorganization Cases,
offset partially by an increase in sales promotion expense. The payroll expense
reduction is primarily attributable to a reduction in store payroll as the
Company implemented several technology driven programs to eliminate store
nonselling workload, such as automating the price change, transfer and return to
vendor processes as well as reengineering the store cash office and gift wrap
functions. In addition, $4 million was incurred under the key employee retention
bonus program for Fiscal 1997 compared to $5.0 million for Fiscal 1996. The
decline is due to an increase in the profit threshold to which such bonus is
tied. The expense savings above were partially offset by an increase of $0.7
million in hiring and recruiting expenses for new executives.
 
     Provision for doubtful accounts increased to 1.5% of net sales for Fiscal
1997 compared to 1.2% of net sales for Fiscal 1996. Consistent with industry
trends, net charge offs increased due to the rise in personal bankruptcy filings
and delinquent customer balances.
 
     Interest expense increased to $7.1 million for Fiscal 1997 from $6.5
million for Fiscal 1996. Interest expense increased due to the additional
borrowings to support working capital requirements and capital expenditures.
 
     Other income fell from $1.1 million in Fiscal 1996 to $0.7 million in
Fiscal 1997. The Company had certain interest rate swap agreements (old swaps)
and was required to make adjustments to market value. For Fiscal 1997, the swap
adjustment to market resulted in an expense of $0.6 million compared to income
of $1.1 million in Fiscal 1996. Fiscal 1997's swap expense was offset by $1.3
million in interest income generated by a federal income tax refund received in
1997. With the emergence from bankruptcy protection, the old swaps were bought
out and are no longer in force. Also, on December 30, 1997 the Company entered
into a new swap agreement with a notional amount of $115 million (expiring
September 28, 2001). This agreement has been matched to the Company's
securitization facility to reduce the impact of interest rate fluctuations. See
Item 7a.
 
     Reorganization expense increased by $3.9 million to $27.5 million for
Fiscal 1997 from $23.6 million for Fiscal 1996. The Company expensed $6.9
million more in professional fees in Fiscal 1997 compared to Fiscal 1996. Also,
in Fiscal 1997 there was a $2.6 million expense recorded for an adjustment to
estimated allowed claims, and a $2.1 million expense recorded for reorganization
bonus that did not occur in Fiscal 1996. In Fiscal 1996 there was an expense
recorded of $7.4 million for equipment lease settlements that did not occur in
Fiscal 1997. There was also a reduction in financing cost expense of $2.4
million.
 
     In Fiscal 1997 a state income tax expense provision was made for
approximately $0.5 million. Fiscal 1997 operating loss resulted in additional
federal net operating loss carryforwards. The Company reviewed the status of its
deferred tax valuation allowance and determined that a deferred tax asset of
$7.9 million should be recognized. This results in a net income tax benefit
being recorded in Fiscal 1997. See the Company's Consolidated Financial
Statements and the accompanying notes set forth in Item 8.
 
     The discontinued operations loss, net of tax, recorded in 1997 is for the
extinguishment of debt for Margo's. In December 1995 the Bankruptcy Court
approved the disposal of Margo's. The loss recorded represents the difference
between the amount of cash Margo's creditors received as part of the plan of
reorganization and the liabilities subject to settlement recorded by Margo's.
 
     In Fiscal 1997 an extraordinary loss of $28.1 million was recorded in
connection with the extinguishment of the Company's prepetition liabilities. The
loss is based on the excess of the fair value of the stock and cash distributed
to the general unsecured creditors over the carrying amount of the liabilities
extinguished.
 
                                       15
<PAGE>   18
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Company's principal sources of funds are cash flow from operations and
borrowings under the Revolving Credit Facility and Receivable Securitization
Facility (collectively, the "Credit Facilities"). The Company's primary ongoing
cash requirements are to fund debt service, make capital expenditures, and
finance working capital. The Company has increased the maximum borrowings amount
to $150 million under the Revolving Credit Facility, and to $175 million under
the Receivable Securitization Facility. The Company increased its Credit
Facilities in part to provide additional borrowing capacity for funding new
customer accounts receivable resulting from the Stone & Thomas acquisition and
to accommodate future growth.
 
     Net cash provided by operating activities was $16.1 million for Fiscal
1998, compared to $53.4 million used in Fiscal 1997. During Fiscal 1998
approximately $15.0 million in payments were made for professional fees, other
administrative expense payments, lease cure payments, and other items that were
related to the Company's chapter 11 case. Trade payables decreased $2.7 million
during Fiscal 1998, compared to an increase of $16.4 million for Fiscal 1997.
The increase in trade payables for Fiscal 1998 reflects increases in inventory
levels for the Elder-Beerman core (i.e., non-Stone & Thomas) department stores
and increases in inventory due to the addition of the Stone & Thomas stores. The
increase in trade payables for Fiscal 1997 reflects trade accounts payable
returning to a normalized level following the commencement of the Company's
chapter 11 case. This was partially offset by a $25.5 million net income for
Fiscal 1998 compared to a $29.0 million net loss for Fiscal 1997.
 
     Net cash used in investing activities was $40.4 million for Fiscal 1998,
compared to $21.0 million for Fiscal 1997. The Stone & Thomas acquisition on
July 27, 1998 required an investment of $19.4 million, net of cash acquired as
part of the Stone & Thomas business. On November 23, 1998 the Company acquired
the Stone & Thomas customer accounts receivable portfolio from Alliance Data
Systems for $13.0 million. During Fiscal 1998 the Company sold seven of the
stores acquired from Stone & Thomas for $5.8 million. The Company also purchased
for $2.8 million the department store building that housed the Southtown
shopping center store. This department store was relocated to the Dayton Mall,
and the Southtown location was sold for $6.0 million. Capital expenditures for
store maintenance, remodeling, and data processing totaled $17.0 million for
Fiscal 1998 compared to $21.0 million for Fiscal 1997.
 
     For Fiscal 1998, net cash provided by financing activities was $26.0
million compared to $73.8 for Fiscal 1997. In August 1998 the Company issued
3,220,000 shares of additional Common Stock. A net amount of $65.4 million was
raised from the offering. The funds provided by the offering were used to pay
down debt for the purchase of Stone & Thomas.
 
     The Company believes that it will generate sufficient cash flow from
operations, as supplemented by its available borrowings under the Credit
Facilities, to meet anticipated working capital and capital expenditure
requirements, as well as debt service requirements under the Credit Facilities.
 
     The Company may from time to time consider acquisitions of department store
assets and companies. Acquisition transactions, if any, are expected to be
financed through a combination of cash on hand from operations, the Credit
Facilities and the possible issuance from time to time of long-term debt or
other securities. Depending upon the conditions in the capital markets and other
factors, the Company will from time to time consider the issuance of debt or
other securities, or other possible capital market transactions, the proceeds of
which could be used to refinance current indebtedness on for other corporate
purposes.
 
YEAR 2000 DISCLOSURE
 
     The term "Year 2000 Issue" is a general term used to describe the various
problems that may result from the improper processing of dates and
date-sensitive calculations by computers and other machinery as the year 2000 is
approached and reached. These problems generally arise from the fact that most
of the world's computer hardware and software have historically used only two
digits to identify the year in a date, often meaning that the computer will fail
to distinguish dates in the "2000s" from the dates in the "1900s". These
problems may also arise from other sources as well, such as the use of special
codes and conventions in software that make use of the date values.
 
                                       16
<PAGE>   19
 
     The Company expects to be Year 2000 ready.  "Year 2000 ready" means that
critical systems, devices, applications or business relationships have been
evaluated and are expected to be suitable for continued use into and beyond the
Year 2000, and that contingency plans are in place to mitigate risks stemming
from the failure of other parties to be Year 2000 ready.
 
     The Company began addressing the Year 2000 issue in the early 1990s by
changing its computer systems development standards for new systems to utilize
Year 2000 compliant date storage techniques. The Company is using a multistep
approach in conducting its Year 2000 Readiness Project. These steps are
inventory, assessment, remediation and verification, and contingency planning.
The first step, an inventory of critical systems and devices with potential Year
2000 problems was completed in July of 1998. The next step, completed in October
1998, was an assessment to determine any necessary changes to ensure Year 2000
readiness. The assessment confirmed estimates of $300,000 to make central
computer systems Year 2000 ready, and revealed other noninformation systems and
equipment requiring additional remediation costs of $275,000. The Company has
completed evaluation, remediation, verification, and implementation of 95% of
its internally developed systems. The remaining internally developed systems
were completed in the first quarter of 1999. The Company is utilizing internal
and external resources in its effort to be Year 2000 ready by mid 1999. The
Company has completed formal communication with third party information systems
suppliers to solicit Year 2000 readiness statements. Forty-seven third party
information systems suppliers were contacted with the following response: 93%
indicate that they are compliant now, 7% indicate that compliant versions of
their products are available. The Company will implement all but two of these
updated versions in the first quarter of 1999, the remaining noncompliant
suppliers products will be implemented during the second quarter of 1999.
Noninformation systems areas will be completed in the second quarter of 1999.
The Company has issued formal communication to critical noninformation systems
service providers to determine the extent to which the Company is vulnerable to
those third parties' failure to remediate their own Year 2000 issues. The
Company can not predict the outcome of other companies' remediation efforts,
however it has no knowledge that any of these companies' will not be Year 2000
ready. The Company began systems testing in February 1999. The Company will
continue general systems testing to verify that its systems are Year 2000 ready.
 
     Testing will be completed in the second quarter of 1999. The Company will
promptly respond to issues discovered by general systems testing. Contingency
plans will be prepared so that the Company's critical business processes can be
expected to continue to function on January 1, 2000 and beyond. The Company's
contingency plans will be structured to address both remediation efforts of
systems and their components and overall business operating risk. These plans
are intended to mitigate both internal risks as well as potential risks in the
Company's supply chain and in maintaining the confidence of its customers. The
Company believes that its most reasonably likely worst case scenario is that key
suppliers or service providers fail to meet their commitments to the Company due
to failure on their part or on the part of other underlying business entities to
be Year 2000 ready. The Company has assessed the risks associated with such
failures and believes that its contingency plans would mitigate the long-term
effect of such a scenario. If a temporary disruption does occur, the Company
does not expect that it would have a material adverse affect on its financial
position and results of operations.
 
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
     The Company is subject to the risk of fluctuating interest rates in the
normal course of business, primarily as a result of its variable rate borrowing.
The Company has entered into a variable to fixed rate interest-rate swap
agreement to effectively reduce its exposure to interest rate fluctuations. A
hypothetical 100 basis point change in interest rates would not materially
affect the Company's financial position, liquidity or results of operations.
 
     The Company does not maintain a trading account for any class of financial
instrument and is not directly subject to any foreign currency exchange or
commodity price risk. As a result, the Company believes that its market risk
exposure is not material to the Company's financial position, liquidity or
results of operations. Certain other information required under this Item 7a is
included in the Company's 1998 Annual Report to Shareholders contained in Item
8.
 
                                       17
<PAGE>   20
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
INDEPENDENT AUDITORS' REPORT TABLE OF CONTENTS
 
<TABLE>
<S>                                                           <C>
Independent Auditors' Report................................     19
Consolidated Financial Statements as of January 30, 1999 and
January 31, 1998 and for each of the three fiscal years in
the period ended January 30, 1999:
  Statements of Operations..................................     20
  Balance Sheets............................................     21
  Statements of Shareholders' Equity........................     22
  Statements of Cash Flows..................................     23
  Notes to Consolidated Financial Statements................  24-37
</TABLE>
 
                                       18
<PAGE>   21
 
                          INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors and Shareholders of
The Elder-Beerman Stores Corp.:
 
     We have audited the accompanying consolidated balance sheets of The
Elder-Beerman Stores Corp. and subsidiaries (the "Company") as of January 30,
1999 and January 31, 1998 and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended January 30, 1999. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of January 30,
1999 and January 31, 1998 and the results of their operations and their cash
flows for each of the three fiscal years in the period ended January 30, 1999,
in conformity with generally accepted accounting principles.
 
DELOITTE & TOUCHE LLP
 
April 9, 1999
Dayton, Ohio
 
                                       19
<PAGE>   22
 
                THE ELDER-BEERMAN STORES CORP. AND SUBSIDIARIES
 
                      CONSOLIDATED STATEMENT OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                           YEAR ENDED
                                                            -----------------------------------------
                                                            JANUARY 30,    JANUARY 31,    FEBRUARY 1,
                                                               1999           1998           1997
                                                            -----------    -----------    -----------
                                                             (DOLLARS IN THOUSANDS, EXCEPT PER SHARE
                                                                              DATA)
<S>                                                         <C>            <C>            <C>
Revenues:
  Net sales.............................................     $632,420       $581,372       $569,557
  Financing.............................................       25,573         26,574         27,451
                                                             --------       --------       --------
     Total revenues.....................................      657,993        607,946        597,008
                                                             --------       --------       --------
Costs and expenses:
  Cost of merchandise sold, occupancy and buying
     expenses...........................................      450,460        423,542        410,067
  Selling, general and administrative expenses..........      168,995        157,414        163,321
  Acquisition and integration expense...................        4,154
  Provision for doubtful accounts.......................        5,046          8,636          6,680
  Interest expense......................................       11,844          7,084          6,467
  Other income..........................................       (3,293)          (661)        (1,106)
                                                             --------       --------       --------
     Total costs and expenses...........................      637,206        596,015        585,429
                                                             --------       --------       --------
Earnings before reorganization items and income tax
  expense (benefit).....................................       20,787         11,931         11,579
Reorganization items....................................        1,318        (27,542)       (23,648)
                                                             --------       --------       --------
Earnings (loss) before income tax expense (benefit),
  discontinued operations and extraordinary item........       22,105        (15,611)       (12,069)
Income tax expense (benefit)............................       (3,356)        (7,412)           360
                                                             --------       --------       --------
Earnings (loss) from continuing operations..............       25,461         (8,199)       (12,429)
Discontinued operations.................................                       7,378
                                                             --------       --------       --------
Earnings (loss) before extraordinary item...............       25,461           (821)       (12,429)
                                                             --------       --------       --------
Extraordinary item......................................                     (28,131)
                                                             --------       --------       --------
Net earnings (loss).....................................     $ 25,461       $(28,952)      $(12,429)
                                                             ========       ========       ========
Earnings (loss) per common shares -- basic:
  Continued operations..................................     $   1.81       $  (6.58)      $(100.20)
  Discontinuing operations..............................                        5.92
  Extraordinary item....................................                      (22.58)
                                                             --------       --------       --------
Net earnings (loss).....................................     $   1.81       $ (23.24)      $(100.20)
                                                             ========       ========       ========
Earnings (loss) per common share -- diluted:
  Continuing operations.................................     $   1.76       $  (6.58)      $(100.20)
  Discontinued operations...............................                        5.92
  Extraordinary item....................................                      (22.58)
                                                             --------       --------       --------
Net earnings (loss).....................................     $   1.76       $ (23.24)      $(100.20)
                                                             ========       ========       ========
</TABLE>
 
              See notes to the consolidated financial statements.
 
                                       20
<PAGE>   23
 
                THE ELDER-BEERMAN STORES CORP. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                JANUARY 30,    JANUARY 31,
                                                                   1999           1998
                                                                -----------    -----------
                                                                  (DOLLARS IN THOUSANDS)
<S>                                                             <C>            <C>
ASSETS
  Current assets:
  Cash and equivalents......................................     $  8,146       $  6,497
  Customer accounts receivable (less allowance for doubtful
     accounts: Fiscal 1998 -- $4,377, Fiscal 1997 --
     $4,177)................................................      141,205        136,705
  Merchandise inventories...................................      171,764        137,507
  Deferred tax asset........................................        5,151          2,595
  Other current assets......................................       12,143         10,051
                                                                 --------       --------
                                                                  338,409        293,355
                                                                 --------       --------
Property:
  Land and improvements.....................................        1,300          1,030
  Buildings and leasehold improvements......................       60,636         62,074
  Furniture, fixtures, and equipment........................      100,950         85,991
  Construction in progress..................................        1,554          1,141
                                                                 --------       --------
  Total cost................................................      164,440        150,236
  Less accumulated depreciation and amortization............      (90,530)       (86,980)
                                                                 --------       --------
     Property, net..........................................       73,910         63,256
                                                                 --------       --------
Other assets:
  Goodwill, net of accumulated amortization of $283.........       15,040
  Other.....................................................       26,600         14,754
                                                                 --------       --------
                                                                   41,640         14,754
                                                                 --------       --------
                                                                 $453,959       $371,365
                                                                 ========       ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long term debt.........................     $    951       $  1,105
  Accounts payable..........................................       53,959         49,005
  Accrued liabilities:
     Compensation and related items.........................        4,415          8,562
     Income and other taxes.................................        9,365          6,581
     Rent...................................................        2,902          2,079
     Other..................................................       15,340         11,964
                                                                 --------       --------
       Total current liabilities............................       86,932         79,296
                                                                 --------       --------
Long-term obligations -- less current portion...............      121,507        142,024
Deferred items..............................................        8,019          4,534
Commitments and contingencies (Note O)
Shareholders' equity:
Common stock, no par, 15,898,864 and 12,583,789 shares
  issued and outstanding at January 30, 1999 and January 31,
  1998, respectively........................................      266,683        199,351
Unearned compensation -- restricted stock, net..............       (2,028)        (1,225)
Deficit.....................................................      (27,154)       (52,615)
                                                                 --------       --------
Total shareholders' equity..................................      237,501        145,511
                                                                 --------       --------
                                                                 $453,959       $371,365
                                                                 ========       ========
</TABLE>
 
              See notes to the consolidated financial statements.
                                       21
<PAGE>   24
 
                THE ELDER-BEERMAN STORES CORP. AND SUBSIDIARIES
 
     CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                        UNEARNED
                                  PREFERRED              ADDITIONAL   COMPENSATION-                   TOTAL
                                    STOCK      COMMON     PAID-IN      RESTRICTED                 SHAREHOLDERS'
                                  SERIES B     STOCK      CAPITAL      STOCK, NET     (DEFICIT)      EQUITY
                                  ---------   --------   ----------   -------------   ---------   -------------
<S>                               <C>         <C>        <C>          <C>             <C>         <C>
Shareholders' equity at February
  3, 1996 (124,036 common shares
  outstanding)..................     $7       $  6,511    $23,283                     $(11,234)     $ 18,567
Net loss........................                                                       (12,429)      (12,429)
                                     --       --------    -------        -------      --------      --------
Shareholders' equity at February
  1, 1997 (124,036 common shares
  outstanding)..................      7          6,511     23,283                      (23,663)        6,138
Net loss........................                                                       (28,952)      (28,952)
Common stock issuance at
  bankruptcy emergence
  (12,372,960 shares)...........     (7)       191,580    (23,283)                                   168,290
Restricted shares issued (86,793
  common shares)................                 1,260                   $(1,225)                         35
                                     --       --------    -------        -------      --------      --------
Shareholders' equity at January
  31, 1998 (12,583,789 common
  shares outstanding)...........               199,351                    (1,225)      (52,615)      145,511
Net earnings....................                                                        25,461        25,461
Common stock issued (3,228,943
  shares).......................                65,563                                                65,563
Restricted shares issued, net of
  forfeitures and amortization
  (86,132 common shares)........                 1,769                      (803)                        966
                                     --       --------    -------        -------      --------      --------
Shareholders' equity at January
  30, 1999 (15,898,864 common
  shares outstanding)...........              $266,683                   $(2,028)     $(27,154)     $237,501
                                     ==       ========    =======        =======      ========      ========
</TABLE>
 
              See notes to the consolidated financial statements.
 
                                       22
<PAGE>   25
 
                THE ELDER-BEERMAN STORES CORP. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                            YEAR ENDED
                                                              ---------------------------------------
                                                              JANUARY 30,   JANUARY 31,   FEBRUARY 1,
                                                                 1999          1998          1997
                                                              -----------   -----------   -----------
                                                                      (DOLLARS IN THOUSANDS)
<S>                                                           <C>           <C>           <C>
Cash flows from operating activities:
  Net earnings (loss).......................................    $25,461      $(28,952)     $(12,429)
  Adjustments to reconcile net loss to net cash provided by
    (used in) operating activities:
  Provision for doubtful accounts...........................      5,046         8,636         6,680
  Deferred income taxes.....................................     (4,672)       (7,877)
  Provision for depreciation and amortization...............     13,860        11,849        13,139
  Loss (gain) on disposal of assets.........................     (2,418)          665         1,737
  Loss on equipment settlements.............................                       74         7,458
  Stock-based compensation expense..........................      1,564            85
  Payment to general unsecured creditors....................                  (82,215)
  Discontinued operations...................................                   (7,378)
  Extraordinary item........................................                   28,131
  Other.....................................................                                    365
  Changes in noncash assets and liabilities, net of amounts
    acquired:
    Customer accounts receivable............................      1,742         2,473       (10,118)
    Merchandise inventories.................................    (12,384)      (10,657)       (7,545)
    Other current assets....................................       (514)       12,644        (5,331)
    Other long-term assets..................................       (690)        1,566           916
    Accounts payable........................................     (2,698)       16,423        (2,710)
    Accrued liabilities.....................................     (8,187)        1,113        (2,478)
                                                                -------      --------      --------
       Net cash provided by (used in) operating
         activities.........................................     16,110       (53,420)      (10,316)
                                                                -------      --------      --------
Cash flows from investing activities:
  Capital expenditures......................................    (16,966)      (20,994)       (4,759)
  Proceeds from sale of property............................     11,793                       1,200
  Acquisition of customer accounts receivable...............    (13,046)
  Real estate acquired......................................     (2,814)
  Payment for acquired business, net of cash acquired.......    (19,405)
  Other.....................................................                                    571
                                                                -------      --------      --------
       Net cash used in investing activities................    (40,438)      (20,994)       (2,988)
                                                                -------      --------      --------
Cash flows from financing activities:
  Net borrowings (payments) under asset securitization
    agreement...............................................     (8,605)      123,015
  Net borrowings (payments) on bankers' acceptance and
    revolving lines of credit...............................    (10,960)       10,960
  Payments on long-term obligations.........................     (1,105)         (748)         (991)
  Debt acquisition payments.................................     (1,151)       (1,634)       (1,052)
  Proceeds from common stock issuance, net of expense.......     65,381
  Payments on debt assumed at acquisition...................    (17,583)
  Net borrowings (payments) under DIP Facility..............                  (57,773)        7,773
                                                                -------      --------      --------
       Net cash provided by financing activities............     25,977        73,820         5,730
                                                                -------      --------      --------
Increase (decrease) in cash and equivalents.................      1,649          (594)       (7,574)
Cash and equivalents -- beginning of year...................      6,497         7,091        14,665
                                                                -------      --------      --------
Cash and equivalents -- end of year.........................    $ 8,146      $  6,497      $  7,091
                                                                =======      ========      ========
Supplemental cash flow information:
  Interest paid.............................................    $11,299      $  6,945      $  6,929
  Income taxes paid.........................................        569           497           335
Supplemental non-cash investing and financing activities:
  Capital leases............................................                      235
  Property acquired from lease settlements..................                                  3,142
</TABLE>
 
                See notes to consolidated financial statements.
                                       23
<PAGE>   26
 
                THE ELDER-BEERMAN STORES CORP. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
 
A.  SIGNIFICANT ACCOUNTING POLICIES
 
     Principles of Consolidation -- The consolidated financial statements
     include the accounts of The Elder-Beerman Stores Corp. and subsidiaries,
     including The El-Bee Chargit Corp., a finance subsidiary and Bee Gee Shoe
     Corp. (collectively , the "Company"). All significant intercompany balances
     and transactions have been eliminated in consolidation.
 
     Fiscal Year -- The Company's fiscal year ends on the Saturday nearest
     January 31. Fiscal years 1998, 1997 and 1996 consist of 52 weeks ended
     January 30, 1999, January 31, 1998 and February 1, 1997, respectively.
 
     Estimates -- The preparation of the consolidated financial statements in
     conformity with generally accepted accounting principles requires
     management to make estimates and assumptions that affect the reported
     amounts of assets and liabilities and disclosure of contingent assets and
     liabilities at the date of the consolidated financial statements and the
     reported amounts of revenues and expenses during the reporting period.
     Actual results could differ from those estimates.
 
     Related Parties -- The Company leased real estate under operating leases
     from certain affiliated entities, which were owned by certain directors and
     officers, and made payments to these related parties totaling $3,247 and
     $3,742 in fiscal years 1997 and 1996, respectively. As a result of the
     issuance of new common shares of the Company as of the Effective Date,
     these entities' directors and officers are no longer related parties.
 
     Cash and Equivalents -- The Company considers all highly liquid investments
     with original maturities of three months or less at the date of purchase to
     be cash equivalents.
 
     Customer Accounts Receivable -- Customer accounts receivable are classified
     as current assets since the average collection period is generally less
     than one year.
 
     Merchandise Inventories -- Retail inventory is determined principally by
     the retail method applied on a last-in, first-out (LIFO) basis and is
     stated at the lower of cost or market. If the first-in, first-out (FIFO)
     basis had been used, inventories would be higher by $886 at January 30,
     1999 and $6,657 at January 31, 1998. The decrease in the LIFO reserve in
     fiscal 1998 occurred in the fourth quarter ended January 30, 1999, as a
     result of increased inventory levels primarily due to the acquisition of
     Stone & Thomas.
 
     Property is stated at cost less accumulated depreciation determined by the
     straight-line method over the expected useful lives of the assets. Assets
     held under capital leases and related obligations are recorded initially at
     the lower of fair market value or the present value of the minimum lease
     payments. The straight-line method is used to amortize such capitalized
     costs over the lesser of the expected useful life of the asset or the life
     of the lease. The estimated useful lives by class of asset are:
 
<TABLE>
    <S>                                                             <C>
    Buildings...................................................    25 to 50 years
    Leasehold improvements......................................    10 to 20 years
    Furniture, fixtures and equipment...........................     3 to 10 years
</TABLE>
 
     Other Assets -- Included in other assets is goodwill, which is amortized
     using the straight-line method over an estimated useful life of 25 years.
     The Company periodically evaluates the carrying value of long-lived assets,
     including goodwill, when events and circumstances warrant such a review.
     The carrying value of a long-lived asset is considered impaired when the
     anticipated undiscounted cash flow from such asset is separately identified
     and is less than its carrying value.
 
     Revenues are recognized on merchandise inventory sold upon receipt by the
     customer. Finance revenue is generated by outstanding customer accounts
     receivable and recognized as interest is accrued on these outstanding
     balances.
 
     Pre-opening costs associated with opening new stores are charged to expense
     over the first fiscal year of store operations. In April of 1998, the
     American Institute of Certified Public Accountants issued
 
                                       24
<PAGE>   27
 
     Statement of Position 98-5, Reporting on the Costs of Start-Up Activities,
     which requires the costs of start-up costs and organization costs to be
     expensed as incurred. The Statement of Position is effective for financial
     statements for fiscal years beginning after December 15, 1998. Adoption of
     this standard is not expected to have a material impact on the Company's
     financial statements.
 
     Advertising Expense -- The cost of advertising is expensed as incurred.
 
     Stock Options -- The Company measures compensation cost for stock options
     issued to employees using the intrinsic value based method of accounting in
     accordance with Accounting Principles Board Opinion No. 25.
 
     Financial Instruments -- The Company utilizes interest rate swap agreements
     to manage its interest rate risks when receivables are sold under asset
     securitization programs or other borrowings. The Company does not hold or
     issue derivative financial instruments for trading purposes. The Company
     does not have derivative financial instruments that are held or issued and
     accounted for as hedges of anticipated transactions. Amounts currently due
     to or from interest swap counterparties are recorded in interest expense in
     the period in which they accrue. Gains or losses on terminated interest
     rate swap agreements are included in long-term liabilities or assets and
     amortized to interest expense over the shorter of the original term of the
     agreements or the life of the financial instruments to which they are
     matched. Gains or losses on the mark-to-market for interest rate swap
     agreements that do not qualify for hedge accounting are recorded as income
     or expense each period.
 
     In June 1998, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
     Instruments and Hedging Activities. Effective for the Company in the fiscal
     year beginning February 1, 2000, SFAS 133 requires an entity to recognize
     all derivatives as either assets or liabilities in the balance sheet and
     measure those instruments at fair value. Gains or losses resulting from
     changes in fair value of the derivatives are recorded depending upon
     whether the instruments meet the criteria for hedge accounting. The Company
     has not completed the process of evaluating the impact that will result
     from adopting SFAS No. 133. The Company is therefore unable to determine
     the impact, if any, that adopting this standard will have on its financial
     position and results of operations when such statement is adopted.
 
     Comprehensive Income -- Effective February 1, 1998, the Company adopted
     SFAS No. 130, Reporting Comprehensive Income. This statement, effective for
     fiscal years beginning after December 15, 1997, requires the Company to
     report components of comprehensive income in a financial statement that is
     displayed with the same prominence as other financial statements, if
     applicable. Comprehensive income is defined as the change in equity of a
     business enterprise during a period from transactions and other events and
     circumstances from nonowner sources. It includes all changes in equity
     during a period except those resulting from investments by owners and
     distributions to owners. Since the Company has no components that would be
     included in other comprehensive income, adoption of this standard has no
     impact on the Company's financial statements.
 
     Reclassifications -- Certain amounts in the fiscal 1997 and 1996 financial
     statements have been reclassed to conform with the fiscal 1998
     presentation.
 
B.  CHAPTER 11 CASE
 
     On October 17, 1995 (the "Filing Date"), the Company filed petitions for
     relief under chapter 11 of the United States Bankruptcy Code ("Chapter
     11"). From that time until December 30, 1997, the Company operated its
     business as a debtor in possession subject to the jurisdiction of the
     United States Bankruptcy Court for the Southern District of Ohio, Western
     Division (the "Bankruptcy Court").
 
     On December 30, 1997 (the "Effective Date"), the Company substantially
     consummated its Third Amended Joint Plan of Reorganization dated November
     17, 1997, as amended, (the "Joint Plan"), which was confirmed by an order
     of the Bankruptcy Court entered on December 16, 1997.
 
     The consolidated financial statements of the Company during its Chapter 11
     case were presented in accordance with American Institute of Certified
     Public Accountants Statement of Position 90-7, Financial Reporting by
     Entities in Reorganization under the Bankruptcy Code ("SOP 90-7"). As of
     the Effective Date, the reorganization value of assets of the Company
     exceeded total liabilities. As such, in accordance with SOP 90-7,
     fresh-start accounting and reporting was not adopted.
 
                                       25
<PAGE>   28
 
     The Joint Plan established a reorganized Company, including a new Board of
     Directors, new benefit and compensation programs and agreements, a
     reorganization bonus paid to certain executives, authorization and issuance
     of shares of new common and preferred stock and the issuance of warrants.
     In addition, the Joint Plan provided for the settlement of prepetition
     liabilities subject to compromise, in the Company's Chapter 11 case in
     exchange for cash, shares of new common stock or reinstatement as
     liabilities of the reorganized Company.
 
     The cash disbursements upon the effectiveness of the Joint Plan were as
     follows:
 
<TABLE>
    <S>                                                             <C>
    Holders of general unsecured claims.........................    $   79,698
    Holders of unsecured claims against the Company's
      discontinued Margo's operations...........................         2,517
                                                                    ----------
    Total payments made to general unsecured creditors..........    $   82,215
                                                                    ==========
</TABLE>
 
     The new common shares issued upon the effectiveness of the Joint Plan were
     as follows:
 
<TABLE>
    <S>                                                             <C>
    Holders of general unsecured claims.........................    12,279,611
    Holders of old common stock interests.......................       124,036
    Reorganization bonus to certain executives..................        93,349
                                                                    ----------
                                                                    12,496,996
                                                                    ==========
</TABLE>
 
     In addition to receiving new common shares, the holders of common stock
     prior to the Company's emergence from bankruptcy received 249,809 Series A
     Stock Warrants and 374,713 Series B Stock Warrants at the Effective Date.
     The holders of preferred stock prior to the Company's emergence from
     bankruptcy were awarded allowed claims as general unsecured claimants and,
     accordingly, are included in the general unsecured distributions described
     above.
 
     The value of cash and common stock required to be distributed under the
     Joint Plan to the Company's general unsecured creditors exceeded the value
     of the liabilities settled. Therefore, the Company recorded an
     extraordinary loss related to the discharge of these prepetition
     liabilities. The extraordinary loss recorded by the Company was determined
     as follows:
 
<TABLE>
    <S>                                                             <C>
    Cash distribution to general unsecured creditors pursuant to
      the Joint Plan............................................    $   79,698
    Fair value of new common stock issued to general unsecured
      creditors.................................................       178,300
                                                                    ----------
                                                                       257,998
    Less general unsecured claims...............................      (229,867)
                                                                    ----------
    Extraordinary loss..........................................    $   28,131
                                                                    ==========
</TABLE>
 
C.  ACQUISITION
 
     On July 27, 1998, the Company acquired Stone & Thomas for a purchase price
     of approximately $20,200 in cash, subject to the resolution in the first
     half of fiscal 1999 of certain liabilities assumed in the acquisition.
     Stone & Thomas operated 20 department stores located in West Virginia,
     Ohio, Kentucky, and Virginia. This transaction was recorded using the
     purchase method of accounting. The excess of acquisition costs over fair
     value of the net assets acquired of $15,323 was recorded as goodwill.
 
     As part of the Company's acquisition of Stone & Thomas, a plan to exit
     certain activities resulted in the sale of seven of the store locations,
     the closing of two. The Company recorded an accrual to exit of
     approximately $6,800, consisting of $3,841 for lease buyouts, $1,522 for
     employee severance, and $1,419 for store closings and other expenses. The
     Company has paid approximately $3,800 through January 30, 1999 for these
     costs and the total amount accrued is expected to be paid by the end of the
     first half of fiscal 1999. The balance of this accrual at January 30, 1999
     is approximately $3,000. The Company also incurred $4,154 of acquisition
     and integration costs that were expensed as recorded as these related to
     the operations of the combined companies.
 
PRO FORMA SUMMARY OF OPERATIONS DATA (UNAUDITED):
 
     The unaudited pro forma summary of operation data for each of the 52 week
     periods ended January 30, 1999 and January 31, 1998 have been prepared by
     combining the consolidated statement of operations of The Elder-Beerman
     Stores Corp. with the consolidated statement of operations of Stone &
     Thomas for the same periods. To comply with the disclosures required by
     generally accepted accounting principles related to acquisitions, the
     following unaudited pro forma financial information is presented as though
     the
 
                                       26
<PAGE>   29
 
     acquisition occurred at the beginning of fiscal 1997. The expected synergy
     of this acquisition after integration with the existing business, including
     the disposition of stores, is not permitted to be reflected in the pro
     forma results. Therefore, the pro forma results are not indicative of
     results of operations in the future or in the periods presented below.
     Included in the pro forma results are adjustments to depreciation and
     amortization based on the purchase price allocation and the effect of the
     issuance of additional common shares. The net proceeds of the additional
     common shares were used, in part, to purchase Stone & Thomas. The following
     pro forma results reflect the operations of all 20 Stone & Thomas stores up
     to the date of acquisition.
 
<TABLE>
<CAPTION>
                                                                            YEAR ENDED
                                                                    --------------------------
                                                                    JANUARY 30,    JANUARY 31,
                                                                       1999           1998
                                                                    -----------    -----------
                                                                           (UNAUDITED)
    <S>                                                             <C>            <C>
    PRO FORMA RESULTS OF OPERATIONS
    Net sales...................................................     $675,854       $702,836
    Earnings (loss) before extraordinary item...................       17,402        (10,224)
    Net earnings (loss).........................................       17,402        (38,355)
    Net earnings (loss) per common share -- basic...............         1.11          (8.59)
    Net earnings (loss) per common shares -- diluted............         1.08          (8.59)
</TABLE>
 
     Subsequent to the acquisition, the Company closed two stores and sold seven
     store locations. Pro forma net sales for the Company, including only the 11
     continuing Stone & Thomas stores are $665,135 and $675,249 for the years
     ended January 30, 1999 and January 31, 1998, respectively.
 
D.  CUSTOMER ACCOUNTS RECEIVABLE
 
     Customer accounts receivable, which represent finance subsidiary
     receivables, are classified as shown in the following table. Interest is
     charged at an annual rate of 18% to 21%, depending on state law.
 
<TABLE>
<CAPTION>
                                                                    JANUARY 30,    JANUARY 31,
                                                                       1999           1998
                                                                    -----------    -----------
    <S>                                                             <C>            <C>
    TYPE OF ACCOUNT
    Optional and other..........................................     $137,592       $131,825
    Deferred payment............................................        8,463          9,736
                                                                     --------       --------
    Total.......................................................      146,055        141,561
    Less:
      Allowance for doubtful accounts...........................       (4,377)        (4,177)
      Unearned interest on deferred contracts...................         (473)          (679)
                                                                     --------       --------
    Customer accounts receivable, net...........................     $141,205       $136,705
                                                                     ========       ========
</TABLE>
 
     Deferred payment accounts include the remaining unearned interest charge to
     be received. Unearned interest is amortized to finance income using the
     effective interest method.
 
<TABLE>
<CAPTION>
                                                                           YEAR ENDED
                                                            -----------------------------------------
                                                            JANUARY 30,    JANUARY 31,    FEBRUARY 1,
                                                               1999           1998           1997
                                                            -----------    -----------    -----------
    <S>                                                     <C>            <C>            <C>
    Allowance for doubtful accounts:
      Balance, beginning of year........................     $  4,177       $  3,800       $  3,200
      Provision.........................................        5,046          8,636          6,680
      Other.............................................        1,463
      Charge offs, net of recoveries....................       (6,309)        (8,259)        (6,080)
                                                             --------       --------       --------
    Balance, end of year................................     $  4,377       $  4,177       $  3,800
                                                             ========       ========       ========
</TABLE>
 
     In the fourth quarter of fiscal 1998, the Company acquired Stone & Thomas'
     customer accounts receivable portfolio, which was previously owned and
     serviced by a third-party servicer. This purchase was part of the Company's
     initial plan of acquisition. The portfolio totaled approximately $11,300,
     net of an initial allowance for doubtful accounts of approximately $1,500
     and expenses of approximately $300 which were included as part of the
     purchase price allocation.
 
                                       27
<PAGE>   30
 
     Customer accounts receivable result from the Company's proprietary credit
     card sales to customers residing principally in the midwestern states. As
     such, the Company believes it is not dependent on a given industry or
     business for its customer base and therefore has no significant
     concentration of credit risk.
 
     The El-Bee Chargit Corp. ("Chargit") purchases substantially all
     Elder-Beerman and subsidiaries' proprietary credit card receivables; such
     receivables are purchased at a 3% discount (2% discount prior to January
     1998). Customer accounts receivable held by the finance subsidiary are
     included above; purchase discounts are eliminated in consolidation.
 
E.  LONG-TERM OBLIGATIONS
 
     On December 30, 1997, the Company, through its financing subsidiary,
     entered into a three-year $125,000 Revolving Credit Facility ("Credit
     Facility") and a three-year variable rate securitization loan agreement
     ("Securitization Facility") with a commercial bank, that effectively
     replaced the prior DIP Facility and paid certain liabilities subject to
     compromise and administrative claims. During 1998, the Company increased
     the Credit Facility to $150,000 and the Securitization Facility to
     $175,000. The Company increased the credit facilities to provide additional
     borrowing capacity to accommodate future growth and for funding customer
     accounts receivable resulting from the Stone & Thomas acquisition.
 
     The Credit Facility provides for borrowings and letters of credit in an
     aggregate amount up to $150,000, subject to a borrowing base formula based
     primarily on merchandise inventories and certain borrowing limitations for
     a defined limited period of the year. There is a $40,000 sublimit for
     letters of credit. The Company has the option to finance borrowings at
     either prime plus 37.5 basis points (8.125% at January 30, 1999) or LIBOR
     plus a minimum of 137.5 basis points. Subsequent to January 1999, the
     interest rate on these borrowings can fluctuate based on certain financial
     ratios of the Company. In addition, the Company incurs a commitment fee on
     the unused line of credit. As of January 30, 1999, the Company had $12,622
     in outstanding letters of credit and approximately $72,000 available for
     additional borrowings based primarily on inventory levels at year end.
 
     The Company's customer accounts receivable are pledged as collateral under
     the Securitization Facility. The Securitization Facility is a revolving
     arrangement whereby the Company can borrow up to $175,000. The borrowings
     under this facility are subject to a borrowing base formula based primarily
     on outstanding consumer accounts receivable. Borrowings bear interest at
     approximately 1-month LIBOR, plus 50 basis points.
 
     Certain financial covenants related to debt, capital expenditures, interest
     and fixed charge expenditures are included in the Credit and Securitization
     facility agreements. Additionally, there are certain other restrictive
     covenants including limitations on the incurrence of additional liens,
     indebtedness, payment of dividends, distributions or other payments on and
     repurchases of outstanding capital stock, investments, mergers, stock
     transfers and sales of assets. Certain ratios related to the performance of
     the accounts receivable portfolio are also included.
 
     Long-term obligations consist of the following:
 
<TABLE>
<CAPTION>
                                                                    JANUARY 30,    JANUARY 31,
                                                                       1999           1998
                                                                    -----------    -----------
    <S>                                                             <C>            <C>
    Mortgage note payable, 9.75%................................     $  2,606       $  2,669
    Industrial development revenue bonds, variable rates based
      on published index of tax-exempt bonds (4.29%)............        3,880          4,260
    Capital lease obligations...................................        1,562          2,225
    Credit facility.............................................                      10,960
    Securitization facility (5.8%)..............................      114,410        123,015
                                                                     --------       --------
    Total.......................................................      122,458        143,129
    Less current portion of long-term obligations...............          951          1,105
                                                                     --------       --------
    Net long-term obligations...................................     $121,507       $142,024
                                                                     ========       ========
</TABLE>
 
     Maturities of borrowings are $951 in 1999, $115,378 in 2000, $870 in 2001,
     $362 in 2002, $281 in 2003 and $4,616 thereafter.
 
                                       28
<PAGE>   31
 
     Collateral for the industrial development revenue bonds and the mortgage
     note payable is land, buildings, furniture, fixtures and equipment with a
     net book value of $4,327 at January 30, 1999.
 
     On December 30, 1997, as a requirement of the Securitization Facility, the
     Company entered into an interest rate swap agreement with a notional amount
     of $115,000, expiring September 28, 2001. This agreement has been matched
     to the Securitization Facility to reduce the impact of interest rate
     changes on cash flows.
 
     The Company utilizes interest rate swap agreements to effectively establish
     long-term fixed rates on borrowings under the Securitization Facility, thus
     reducing the impact of interest rate changes on future income. These swap
     agreements involve the receipt of variable rate amounts in exchange for
     fixed rate interest payments over the life of the agreement. The
     differential between the fixed and variable rates to be paid or received is
     accrued as interest rates change and is recognized as an adjustment to
     interest expense. The Company has outstanding swap agreements with notional
     amounts totaling $115,000 for the fiscal years ended 1998 and 1997.
 
     The Company is exposed to credit related losses in the event of
     non-performance by the counterparties to the swap agreements. All
     counterparties are rated A or higher by Moody's and Standard and Poor's and
     the Company does not anticipate non-performance by any of its
     counterparties.
 
F.  LEASES
 
     The Company leases retail store properties and certain equipment.
     Generally, leases are net leases that require the payment of executory
     expenses such as real estate taxes, insurance, maintenance and other
     operating costs, in addition to minimum rentals. Leases for retail stores
     generally contain renewal or purchase options, or both, and generally
     provide for contingent rentals based on a percentage of sales.
 
     Minimum annual rentals, for leases having initial or remaining
     noncancelable lease terms in excess of one year at January 30, 1999, are as
     follows:
 
<TABLE>
<CAPTION>
                                                                    OPERATING    CAPITAL
                            FISCAL YEAR                              LEASES      LEASES
                            -----------                             ---------    -------
    <S>                                                             <C>          <C>
      1999......................................................    $ 25,100     $  584
      2000......................................................      23,037        525
      2001......................................................      21,360        347
      2002......................................................      19,285        174
      2003......................................................      18,660         81
      Thereafter................................................     166,243         40
                                                                    --------     ------
      Minimum lease payments....................................    $273,685      1,751
                                                                    ========
      Less imputed interest.....................................                    189
                                                                                 ------
    Present value of net minimum lease payments.................                 $1,562
                                                                                 ======
</TABLE>
 
     RENT EXPENSE
 
<TABLE>
<CAPTION>
                                                                           YEAR ENDED
                                                            -----------------------------------------
                                                            JANUARY 30,    JANUARY 31,    FEBRUARY 1
                                                               1999           1998           1997
                                                            -----------    -----------    -----------
    <S>                                                     <C>            <C>            <C>
    Operating Leases:
      Minimum...........................................      $22,238        $17,677        $20,489
      Contingent........................................        2,533          2,108          2,136
                                                              -------        -------        -------
    Total rent expense..................................      $24,771        $19,785        $22,625
                                                              =======        =======        =======
</TABLE>
 
     ASSETS HELD UNDER CAPITAL LEASES
 
<TABLE>
<CAPTION>
                                                            JANUARY 30,    JANUARY 31,
                                                               1999           1998
                                                            -----------    -----------
    <S>                                                     <C>            <C>            <C>
    Buildings...........................................      $ 7,338        $11,033
    Equipment...........................................          235            235
    Less accumulated depreciation and amortization......       (6,646)        (9,997)
                                                              -------        -------
    Net.................................................      $   927        $ 1,271
                                                              =======        =======
</TABLE>
 
                                       29
<PAGE>   32
 
     Assets acquired under capital leases are included in the consolidated
     balance sheets as property, while the related obligations are included in
     long-term obligations.
 
G.  INCOME TAXES
 
     Income tax expense (benefit) consists of the following:
 
<TABLE>
<CAPTION>
                                                                           YEAR ENDED
                                                            -----------------------------------------
                                                            JANUARY 30,    JANUARY 31,    FEBRUARY 1,
                                                               1999           1998           1997
                                                            -----------    -----------    -----------
    <S>                                                     <C>            <C>            <C>
    Current:
      Federal...........................................     $    813       $              $
      State and local...................................          503            465            360
                                                             --------       --------       --------
                                                                1,316            465            360
                                                             --------       --------       --------
    Deferred:
      Net operating losses and tax credit carry
         forwards.......................................        8,955         (5,529)       (13,560)
      Interest..........................................                      (6,119)         6,119
      Deferred income...................................         (266)         1,804          1,513
      Discontinued operations...........................                       2,362            158
      Valuation allowance...............................      (12,337)        (3,759)         6,495
      Other.............................................       (1,024)         3,364           (725)
                                                             --------       --------       --------
                                                               (4,672)        (7,877)            --
                                                             --------       --------       --------
    Income tax expense (benefit)........................     $ (3,356)      $ (7,412)      $    360
                                                             ========       ========       ========
</TABLE>
 
     The following table summarizes the major differences between the actual
     income tax provision attributable to continuing operations and taxes
     computed at the federal statutory rates:
 
<TABLE>
<CAPTION>
                                                            JANUARY 30,    JANUARY 31,    FEBRUARY 1,
                                                               1999           1998           1997
                                                            -----------    -----------    -----------
    <S>                                                     <C>            <C>            <C>
    Federal taxes computed at the statutory rate........     $  7,605       $ (5,464)      $ (4,224)
    State and local taxes...............................          503            465            360
    Valuation allowance.................................      (12,337)        (7,579)         3,767
    Permanent items.....................................          873          5,166            457
                                                             --------       --------       --------
    Income tax benefit..................................     $ (3,356)      $ (7,412)      $    360
                                                             ========       ========       ========
    Effective tax expense (benefit) rate................           --          (47.5)%           --
                                                             ========       ========       ========
</TABLE>
 
     Deferred income taxes consist of the following:
 
<TABLE>
<CAPTION>
                                                            JANUARY 30,    JANUARY 31,
                                                               1999           1998
                                                            -----------    -----------
    <S>                                                     <C>            <C>            
    Deferred tax assets:
      Net operating losses and tax credit carry
         forwards.......................................     $ 21,672       $ 25,576
      Deferred income...................................          868            602
      Bad debts.........................................        1,546          1,518
      Other.............................................        6,132          4,280
                                                             --------       --------
                                                               30,218         31,976
      Valuation allowance...............................      (14,464)       (23,523)
                                                             --------       --------
    Total deferred tax assets...........................       15,754          8,453
                                                             --------       --------
    Deferred tax liabilities............................        1,431            576
                                                             --------       --------
    Net deferred tax asset..............................     $ 14,323       $  7,877
                                                             ========       ========
    Included in the balance sheets:
      Current assets -- deferred tax asset..............     $  5,151       $  2,595
      Other assets......................................        9,172          5,282
                                                             --------       --------
      Net deferred tax assets...........................     $ 14,323       $  7,877
                                                             --------       --------
</TABLE>
 
     Permanent items consist primarily of bankruptcy related expenses that are
     not deductible for tax purposes. The net operating loss carryforwards, tax
     credit carryforwards, and other deferred tax assets will
 
                                       30
<PAGE>   33
 
     result in future benefits only if the Company has taxable income in future
     periods. In accordance with SFAS No. 109, Accounting for Income Taxes, a
     valuation allowance was recorded for the tax effect of a portion of the
     future tax deductions and tax credit carryforwards. In the fourth quarter
     of Fiscal 1998 and Fiscal 1997, the Company reduced the valuation allowance
     to reflect the likely future utilization of its deferred tax assets.
 
     The federal net operating loss carryforward is approximately $54,000 and is
     available to reduce federal taxable income through 2012. The tax credit
     carryforward is approximately $2,600; of which $632 will expire in 2009 and
     2010, and the balance is an indefinite carryforward.
 
H.  EMPLOYEE BENEFIT PLANS
 
     A defined-contribution employee benefit plan (the "Benefit Plan") covers
     substantially all employees. The Company may contribute to the Benefit Plan
     based on a percentage of compensation and on a percentage of earnings
     before income taxes. Expense of $1,316 was recorded in fiscal 1998 for the
     Company's matching contribution to the Benefit Plan. No contribution
     expense was recorded in fiscal years 1997 and 1996. Eligible employees can
     make contributions to the Benefit Plan through payroll withholdings of one
     to fifteen percent of their annual compensation. The Benefit Plan includes
     an employee stock ownership component. The Benefit Plan held all of the
     previously outstanding preferred shares of the Company. These preferred
     shares were included in the settlement of the general unsecured claims on
     December 30, 1997. The preferred shares were settled with a distribution to
     the Benefit Plan of $4,184 in cash and issuance of 644,680 common shares.
 
     The Company has a Stock Purchase Plan, which provides for its employees to
     purchase Elder-Beerman common stock at a 15% discount. Employees can make
     contributions to the Stock Purchase Plan through payroll withholdings of
     one percent to ten percent of their annual compensation, up to a maximum of
     $25 per year. A total of 625,000 shares of common stock are registered and
     unissued under the Stock Purchase Plan.
 
     With the acquisition of Stone & Thomas, the Company assumed a defined
     benefit pension plan, which covered all full-time employees of Stone &
     Thomas upon completion of one year of service and the attainment of age 21.
     The benefits were based upon years of service and the earnings. Accrued
     benefits were frozen as of September 30, 1998, as part of the Company's
     plan of acquisition. The Company's funding policy is to contribute an
     amount annually that satisfies the minimum funding requirements of ERISA
     and that is tax deductible under the Internal Revenue Code. Effective
     January 30, 1999, the company adopted SFAS No. 132, Employers' Disclosures
     About Pensions and Other Postretirement Benefits.
 
                                       31
<PAGE>   34
 
     Summary information for the Company's defined benefit plan as of January
     30, 1999 is as follows:
 
<TABLE>
    <S>                                                             <C>
    Change in the projected benefit obligations:
      Projected benefit obligation at date of acquisition.......    $(5,772)
      Service cost..............................................        (12)
      Interest cost.............................................       (199)
      Actuarial costs...........................................       (614)
      Benefits paid.............................................        505
                                                                    -------
    Projected benefit obligation at end of year.................     (6,092)
                                                                    -------
    Change in the plan assets:
      Fair value of plan assets at date of acquisition..........      5,934
      Actuarial return on plan assets...........................        341
      Employer contributions....................................        353
      Benefits paid.............................................       (505)
                                                                    -------
      Fair value of plan assets at end of year..................      6,123
                                                                    -------
    Plan assets in excess of projected benefit obligations......         31
    Reconciliation of financial status of plan to amounts
      recorded in balance sheet -
      Unrecorded effort of net loss (gain) arising from
         differences between actuarial assumptions used to
         determine periodic pension expense and actual
         expense................................................        521
                                                                    -------
    Net pension asset included in other assets int he Company's
      balance sheet.............................................    $   552
                                                                    =======
    Benefit obligation discount rate............................        6.5%
                                                                    =======
</TABLE>
 
     The components of net pension (income) for the period July 27, 1998 (date
     of acquisition) to January 30, 1999 are as follows:
 
<TABLE>
    <S>                                                             <C>
 
    Service cost, benefits earned from date of acquisition......    $(12)
    Interest cost on projected benefit obligation...............    (199)
    Expected return on plan assets..............................     249
                                                                    ----
    Net pension income..........................................    $ 38
                                                                    ====
</TABLE>
 
     Plan assets are held in a trust and are invested primarily in equities and
     fixed income obligations. The expected long-term rate of return on plan
     assets used in determining net pension income was 8.5%.
 
I.   EARNINGS (LOSS) PER COMMON SHARE
 
     Net earnings (loss) per common share is computed by dividing net earnings
     (loss) by the weighted-average number of common shares outstanding during
     the year. Stock options, restricted shares, deferred shares and warrants
     outstanding represent potential common shares and are included in computing
     diluted earnings per share when the effect is dilutive. There was no
     dilutive effect of potential common shares in fiscal 1997 and 1996. A
     reconciliation of the weighted average shares used in the basic and diluted
     earnings per share calculation is as follows:
 
<TABLE>
<CAPTION>
                                                               1998         1997        1996
                                                            ----------    ---------    -------
    <S>                                                     <C>           <C>          <C>
    Weighted average common shares outstanding --
      basic.............................................    14,078,441    1,245,760    124,036
    Dilutive potential common shares:
      Warrants..........................................       150,049
      Stock options.....................................       185,161
      Restricted shares.................................        33,917
      Deferred shares...................................        25,388
                                                            ----------    ---------    -------
    Adjusted weighted average shares -- diluted.........    14,472,956    1,245,760    124,036
                                                            ==========    =========    =======
</TABLE>
 
                                       32
<PAGE>   35
 
J.   SHAREHOLDERS' EQUITY
 
     In August 1998, the Company issued 3,220,000 shares of common stock in a
     secondary offering at a price of $22 per share. The net proceeds of
     approximately $65,400 provided by the offering were used primarily to
     reduce debt levels associated with the Company's expansion and acquisition
     strategies. In addition, the Company issued 8,943 shares of common stock
     under its stock based compensation plans.
 
     At December 30, 1997, the Company issued shares of common stock to its
     general unsecured claimants, which included 644,680 shares of common stock
     issued in satisfaction of the claims of the old Series B Preferred
     Shareholders. The Board of Directors has the authority to issue five
     million shares of new preferred stock. At January 30, 1999, these shares
     are unissued.
 
     The Company has 25 million no par new common shares authorized. Under a
     Rights Agreement, each outstanding common share presently has one right
     attached that trades with the common share. Generally, the rights become
     exercisable and trade separately after a third party acquires 20% or more
     of the common shares or commences a tender offer for a specified percentage
     of the common shares. Upon the occurrence of certain additional triggering
     events specified in the Rights Agreement, each right would entitle its
     holder (other than, in certain instances, the holder of 20% or more of the
     common shares) to purchase common shares of the Company at an exercise
     price of 50% of the then-current common share market value. The rights
     expire on December 30, 2007, unless the Board of Directors takes action
     prior to that date to extend the rights, and are presently redeemable at
     $.01 per right.
 
K.  STOCK-BASED COMPENSATION
 
     The Equity and Performance Incentive Plan (the "Incentive Plan") authorizes
     the Company's Board of Directors to grant restricted shares, stock options,
     appreciation rights, deferred shares, performance shares and performance
     units. Awards relating to 2,250,000 shares are authorized for issuance
     under this plan and awards related to 1,136,509 shares have been issued as
     of January 30, 1999.
 
     Officers and key employees have been granted stock options under the
     Incentive Plan. The options granted have a maximum term of ten years and
     vest over a period ranging from three to five years. In fiscal 1998 and
     1997, the Company has granted certain discounted stock options with an
     exercise price less than the market price of the stock on the grant date.
 
     The following table summarizes the Company's stock option activity:
 
<TABLE>
<CAPTION>
                                                               WEIGHTED-               WEIGHTED-
                                                                AVERAGE                 AVERAGE
                                                               EXERCISE                EXERCISE
                                                    SHARES       PRICE      SHARES       PRICE
                                                    -------    ---------    -------    ---------
    <S>                                             <C>        <C>          <C>        <C>
    Outstanding at beginning of year..............  773,000     $10.89      773,000     $10.89
    Granted:
      Discounted..................................   29,096      12.07
      Undiscounted................................  165,000      20.51
    Cancelled.....................................  (29,000)     13.86
                                                    -------                 -------
    Outstanding at end of year....................  938,096     $12.53      773,000     $10.89
                                                    =======                 =======
    Exercisable at year end.......................  161,133     $10.89
                                                    =======                 =======
    Weighted-average fair value of stock options
      granted during the year using the
      Black-Scholes options--pricing model
      Discounted..................................              $10.47                  $ 8.63
      Undiscounted................................               11.96
    Weighted-average assumptions used for grants:
      Expected dividend yield.....................                  0%                      0%
      Expected volatility.........................                 50%                     35%
      Risk-free interest rate.....................                5.3%                    6.5%
      Expected life...............................             7 years                 7 years
</TABLE>
 
                                       33
<PAGE>   36
 
     The following table shows various information about stock options
     outstanding at January 30, 1999:
 
<TABLE>
<CAPTION>
                                 OPTIONS OUTSTANDING        OPTIONS EXERCISABLE
                                ----------------------   --------------------------
                                 WEIGHTED-
                                  AVERAGE
                                 REMAINING    WEIGHTED       NUMBER       WEIGHTED-
                                CONTRACTUAL   AVERAGE    EXERCISABLE AT    AVERAGE
       RANGE OF                    LIFE       EXERCISE    JANUARY 30,     EXERCISE
    EXERCISE PRICES   SHARES    (IN YEARS)     PRICE          1999          PRICE
    ---------------   -------   -----------   --------   --------------   ---------
    <S>               <C>       <C>           <C>        <C>              <C>
           9.094 --
             12.375
    ...............   778,465       8.9        $10.89       161,133        $10.89
          14.125 --
             18.000
    ...............    20,076       9.7         15.91
          21.000 --
             24.375
    ...............   139,555       9.1         21.18
                      -------                               -------
                      938,096       9.0        $12,53       161,133        $10.89
                      =======                               =======
</TABLE>
 
     The Incentive Plan provides for the issuance of restricted common shares to
     certain employees and nonemployee directors of the Company. These shares
     have a vesting period of three years. As of January 30, 1999, 172,925
     restricted common shares are issued and outstanding under the plan. The
     fair value of the restricted shares awarded was $1,769 and $1,260 in fiscal
     1998 and 1997, respectively, which is recorded as compensation expense over
     the three-year vesting period.
 
     The Incentive Plan also provides for certain employees to elect to defer a
     portion of their compensation through the purchase of deferred shares. Each
     deferred share represents an employee's right to a share of the Company's
     common stock. At January 30, 1999, 24,533 deferred shares are outstanding.
 
     Total compensation costs charged to loss from continuing operations before
     income taxes for all stock-based compensation awards was approximately
     $1,564 and $85 in fiscal 1998 and 1997, respectively. Had compensation
     costs been determined based on the fair value method of SFAS No. 123 for
     all plans, the Company's net loss and loss per common share would have been
     reduced to the following pro forma amounts:
 
<TABLE>
<CAPTION>
                                                                     1998        1997
                                                                    -------    --------
    <S>                                                             <C>        <C>
    Net earnings (loss):
      As reported...............................................    $25,461    $(28,952)
      Pro forma.................................................     24,211     (29,018)
    Net earnings (loss) per common share -- diluted:
      As reported...............................................       1.76      (23.24)
      Pro forma.................................................       1.67      (23.29)
</TABLE>
 
L.  DISCONTINUED OPERATIONS
 
     In fiscal 1994, the Company adopted a formal plan to dispose of a
     subsidiary, Margo's La Mode, Inc. ("Margo's") and recorded reserves for
     loss on disposal. During fiscal 1995, the Company was unsuccessful in its
     attempt to sell Margo's and decided to liquidate the subsidiary. Margo's
     did not have any sales subsequent to fiscal 1995.
 
     The settlement of Margo's liabilities subject to compromise and other
     liabilities upon the Company's emergence from bankruptcy during fiscal 1997
     resulted in a net gain from discontinued operations of $7,378. The Company
     was able to utilize operating loss carryforwards that were fully reserved
     in prior years to offset the income tax expense related to the gain on
     discontinued operations. Therefore, there is no income tax expense recorded
     in connection with this gain.
 
M. REORGANIZATION ITEMS
 
     During the fourth quarter ended January 30, 1999, the Company recognized
     approximately $1,300 in reorganization income related to the favorable
     settlement of bankruptcy related items. Amounts recorded as reorganization
     costs for fiscal 1997 and 1996 are as follows:
 
                                       34
<PAGE>   37
 
<TABLE>
<CAPTION>
                                                                            YEAR ENDED
                                                                    --------------------------
                                                                    JANUARY 31,    FEBRUARY 1,
                                                                       1998           1997
                                                                    -----------    -----------
    <S>                                                             <C>            <C>
    Professional fees...........................................      $15,505        $ 8,612
    Equipment lease settlements.................................           74          7,458
    Restructuring...............................................        6,852          4,497
    Adjustment to liabilities subject to compromise.............        2,326
    Reorganization bonus........................................        2,100
    Financing costs.............................................          685          3,081
                                                                      -------        -------
    Total.......................................................      $27,542        $23,648
                                                                      =======        =======
</TABLE>
 
     In fiscal 1997 the Company closed two department stores and discontinued
     certain merchandise departments. Property impairment, severance and certain
     store closing costs are included in restructuring costs. The Company
     negotiated various equipment lease settlements primarily during fiscal
     1996. Equipment lease settlement costs primarily resulted from renegotiated
     leases where cash payments and unsecured claims satisfied under the Joint
     Plan were granted in exchange for ownership of the equipment and relief
     from other claims previously filed in connection with the underlying
     leases.
 
N.  DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The following methods and assumptions were used to estimate the fair value
     of each class of financial instruments:
 
     CASH AND EQUIVALENTS -- The carrying amount approximates fair value because
     of the short maturity of those instruments.
 
     ACCOUNTS RECEIVABLE -- The net carrying amount approximates fair value
     because of the relatively short average maturity of the instruments.
 
     LONG-TERM DEBT -- The carrying amount approximates fair value as a result
     of the variable-rate-based borrowings.
 
     INTEREST RATE SWAP AGREEMENTS -- The fair value of interest rate swaps is
     based on the quoted market prices that the Company would pay to terminate
     the swap agreements at the reporting date. The estimated fair value of the
     $115,000 notional amount interest rate swap agreement is $2,625 and $1,548
     loss at January 30, 1999 and January 31, 1998, respectively. There is no
     carrying amount in the consolidated balance sheets.
 
O.  COMMITMENTS AND CONTINGENCIES
 
     LITIGATION -- The Company is a party to various legal actions and
     administrative proceedings and subject to various claims arising in the
     ordinary course of business. In addition, as a result of the bankruptcy
     case, the Company remains subject to the jurisdiction of the Bankruptcy
     Court for matters relating to the consummation of the Joint Plan.
     Management believes the outcome of any of the litigation matters that will
     have a material effect on the Company's results of operations, cash flows
     or financial position have been appropriately accrued.
 
     INSURANCE -- The Company is self-insured for employee medical and workers'
     compensation subject to limitations for which insurance has been purchased.
     Management believes that those claims reported and not paid and claims
     incurred, but not yet reported, are appropriately accrued.
 
                                       35
<PAGE>   38
 
P.  SEGMENT REPORTING
 
     In June 1997, the Financial Accounting Standards Board (FASB) issued
     Statement No. 131, Disclosures about Segments of an Enterprise and Related
     Information, which the Company has adopted in the current year. Operating
     segments are defined as components of an enterprise for which separate
     financial information is available and regularly reviewed by the Company's
     senior management.
 
     Management assesses performance and makes operating decisions based on
     three reportable segments, Department Store, Shoe Store and Finance
     Operations, which have been identified based on differences in products and
     services offered and regulatory conditions.
 
     The two retail segments, Department Store and Shoe Store are identified by
     the merchandise sold and customer base served. The Department Store segment
     sells a wide range of moderate to better branded merchandise, including
     women's, men's and children's apparel and accessories, cosmetics, home
     furnishings and other consumer goods. The Shoe Store segment offers budget
     to moderate assortments of family footwear. The Company's retail stores are
     principally engaged in smaller Midwestern markets in Ohio, Indiana,
     Illinois, Michigan, Pennsylvania, Wisconsin, Kentucky, Virginia and West
     Virginia. Net sales by major merchandising category in the Department Store
     segment are as follows:
 
<TABLE>
<CAPTION>
                                                               1998        1997        1996
                                                             --------    --------    --------
    <S>                                                      <C>         <C>         <C>
    MERCHANDISE CATEGORY
    Women's Ready to Wear................................    $191,953    $179,990    $170,783
    Accessories, Cosmetics...............................     152,650     135,638     132,430
    Mens, Childrens......................................     138,478     128,712     128,933
    Home Stores..........................................     118,109     105,590     103,435
                                                             --------    --------    --------
    Total Department Store...............................    $601,190    $549,930    $535,581
                                                             ========    ========    ========
</TABLE>
 
     The Finance Operations segment is a private label credit card program
     operated by the Company through its wholly owned subsidiary, Chargit.
     Finance Operations segment revenues consist primarily of finance charges
     earned through issuance of the Company's proprietary credit cards. All
     phases of the credit card operation are handled by Chargit, except the
     processing of customer mail payments.
 
     The following table sets forth information for each of the Company's
     segments(1):
 
<TABLE>
<CAPTION>
                                                                       FISCAL YEAR
                                                             --------------------------------
                                                               1998        1997        1996
                                                             --------    --------    --------
    <S>                                                      <C>         <C>         <C>
    DEPARTMENT STORE
    Revenues.............................................    $601,190    $549,930    $535,581
    Depreciation and amortization........................      13,045      11,127      12,416
    Operating profit (Loss)(1)...........................      15,826      12,883      (2,113)
    Capital expenditures.................................      15,933      20,343       4,648
    Total assets.........................................     321,385     229,797     320,173
</TABLE>
 
<TABLE>
<CAPTION>
                                                                       FISCAL YEAR
                                                             --------------------------------
                                                               1998        1997        1996
                                                             --------    --------    --------
    <S>                                                      <C>         <C>         <C>
    SHOE STORE
    Revenues.............................................    $ 31,230    $ 31,442    $ 33,976
    Depreciation and amortization........................         442         406         445
    Operating profit(1)..................................         330         569       1,141
    Capital expenditures.................................         751         347         111
    Total assets.........................................       7,466       8,435       8,250
</TABLE>
 
<TABLE>
<CAPTION>
                                                                       FISCAL YEAR
                                                             --------------------------------
                                                               1998        1997        1996
                                                             --------    --------    --------
    <S>                                                      <C>         <C>         <C>
    FINANCE OPERATIONS
    Revenues(2)..........................................    $ 32,783    $ 32,081    $ 32,728
    Depreciation and amortization........................         373         316         278
    Operating profit(2)..................................      21,461      16,292      19,599
    Capital expenditures.................................         282         304
    Total assets.........................................     125,108     133,133      40,186
</TABLE>
 
                                       36
<PAGE>   39
 
---------------
     (1) Total segment operating profit is reconciled to income before income
         tax expense (benefit), discontinued operations and extraordinary item
         as follows:
 
<TABLE>
<CAPTION>
                                                               1998        1997        1996
                                                             --------    --------    --------
    <S>                                                      <C>         <C>         <C>
    Segment operating profit.............................    $ 37,617    $ 29,744    $ 18,627
    Reorganization items.................................       1,318     (27,542)    (23,648)
    Store closing costs..................................      (1,772)     (8,569)
    Acquisition and integration..........................      (4,154)
    Interest expense.....................................     (11,844)     (7,084)     (6,467)
    Other................................................         940      (2,160)       (581)
                                                             --------    --------    --------
                                                             $ 22,105    $(15,611)   $(12,069)
                                                             ========    ========    ========
</TABLE>
 
---------------
     (2) Finance Operations segment revenues is reconciled to reported financing
         revenues as follows:
 
<TABLE>
<CAPTION>
                                                               1998        1997        1996
                                                             --------    --------    --------
    <S>                                                      <C>         <C>         <C>
    Segment revenues.....................................    $ 32,783    $ 32,081    $ 32,728
    Intersegment operating charge eliminated.............      (7,210)     (5,507)     (5,277)
                                                             --------    --------    --------
                                                             $ 25,573    $ 26,574    $ 27,451
                                                             ========    ========    ========
</TABLE>
 
                                       37
<PAGE>   40
 
ITEM 9.   CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
 
     None.
 
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     (a) Directors
 
         The information set forth under the caption "Election of Directors" in
         the Company's definitive proxy statement for its annual meeting of
         shareholders to be held May 28, 1999 is hereby incorporated by
         reference.
 
     (b) Executive Officers
 
         See Part I.
 
     (c) Compliance with Section 16(a) of the Exchange Act.
 
         The information set forth under the caption "Section 16(a) Beneficial
         Ownership Reporting Compliance" in the Company's definitive proxy
         statement for its annual meeting of shareholders to be held May 28, 
         1999 is hereby incorporated by reference.
 
ITEM 11. EXECUTIVE COMPENSATION
 
     The information set forth under the caption "Compensation of Executive
Officers" in the Company's definitive proxy statement for its annual meeting of
shareholders to be held May 28, 1999 is hereby incorporated by reference.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     The information set forth under the caption "Security Ownership of
Management and Certain Beneficial Owners" in the Company's definitive proxy
statement for its annual meeting of shareholders to be held May 28, 1999 is
hereby incorporated by reference.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
 
     None.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
     (a)(1)  The following consolidated financial statements of the Company and
           its subsidiaries are included in Item 8:
 
           -   Consolidated Balance Sheets -- As of January 30, 1999 and January
               31, 1998
 
           -   Consolidated Statements of Operations -- For the Years Ended
               January 30, 1999, January 31, 1998, and February 1, 1997
 
           -   Consolidated Statements of Changes in Shareholders' Equity -- For
               the Years Ended January 30, 1999, January 31, 1998, and February
               1, 1997
 
           -   Consolidated Statements of Cash Flows -- For the Years Ended
               January 30, 1999, January 31, 1998, and February 1, 1997
 
           -   Notes to Consolidated Financial Statements
 
           -   Report of Independent Auditors
 
                                       38
<PAGE>   41
 
     (a)(2)  The following consolidated financial statement schedule of the
           Company and its subsidiaries is submitted herewith:
 
     All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are included in the
consolidated financial statements, are not required under the related
instructions, or are inapplicable, and therefore have been omitted.
 
     (a)(3)  Exhibits
 
           The following Exhibits are included in this Annual Report on Form
10-K:
 
           2(a)       Third Amended Joint Plan of Reorganization of The
                     Elder-Beerman Stores Corp. and its Subsidiaries dated
                     November 17, 1997 (previously filed as Exhibit 2 to the
                     Company's Form 10 filed on November 26, 1997 (the "Form
                     10"), and incorporated herein by reference)
 
           2(b)       Agreement and Plan of Merger by and Among The
                     Elder-Beerman Stores Corp., The Elder-Beerman Acquisition
                     Corp. and Stone & Thomas dated June 18, 1998 (previously
                     filed as Exhibit 2(b) to the Company's Registration
                     Statement on Form S-1 (File No. 333-57447) (the "Form S-1")
                     and incorporated herein by reference)
 
           2(c)       First Amendment to Agreement and Plan of Merger By and
                     Among The Elder-Beerman Stores Corp., The Elder-Beerman
                     Acquisition Corp. and Stone & Thomas dated July 27, 1998
                     (previously filed as Exhibit 2(c) to the Company's Form S-1
                     and incorporated herein by reference)
 
           3(a)       Amended Articles of Incorporation (previously filed as
                     Exhibit 3(a) to the form 10-K filed on April 30, 1998 (the
                     "1997 Form 10-K"), and incorporated herein by reference)
 
           3(b)       Amended Code of Regulations (previously filed as Exhibit
                     3(b) to the Form 10 and incorporated herein by reference)
 
           4(a)       Stock Certificate for Common Stock (previously filed as
                     Exhibit 4(a) to the Company's Form 10/A-1 filed on January
                     23, 1998 (the "Form 10/A-1") and incorporated herein by
                     reference)
 
           4(b)       Form of Registration Rights Agreement (previously filed as
                     Exhibit 4(b) to the Form 10 and incorporated herein by
                     reference)
 
           4(c)       Rights Agreement By and Between The Elder-Beerman Stores
                     Corp. and Norwest Bank Minnesota, N.A., dated as of
                     December 30, 1997 (the "Rights Agreement") (previously
                     filed as Exhibit 4.1 to the Company's Registration
                     Statement on Form 8-A filed on November 17, 1998 (the "Form
                     8-A") and incorporated herein by reference)
 
           4(d)       Warrant Agreement by and Between Beerman-Peal Holdings,
                     Inc. and the Elder-Beerman Stores Corp. for 249,809 shares
                     of Common Stock at a strike price of $12.80 per share dated
                     December 30, 1997 (previously filed as Exhibit 4(d) to the
                     1997 Form 10-K and incorporated herein by reference)
 
           4(e)       Warrant Agreement by and Between Beerman-Peal Holdings,
                     Inc. and the Elder-Beerman Stores Corp. for 374,713 shares
                     of Common Stock at a strike price of $14.80 per share dated
                     December 30, 1997 (previously filed as Exhibit 4(e) to the
                     1997 Form 10-K and incorporated herein by reference)
 
           4(f)       Amendment No. 1 to the Rights Agreement, dated as of
                     November 11, 1998 (previously filed as Exhibit 4.2 to the
                     Form 8-A and incorporated herein by reference)
 
           10(a)(i)   Pooling and Servicing Agreement Among The El-Bee
                     Receivables Corporation, The El-Bee Chargit Corp. and
                     Bankers Trust Company, dated December 30, 1997 (previously
                     filed as Exhibit 10(a)(i) to the Form 10/A-1 and
                     incorporated herein by reference)
 
                                       39
<PAGE>   42
 
           10(a)(ii)  Series 1997-1 Supplement Among The El-Bee Receivables
                     Corporation, The El-Bee Chargit Corp. and Bankers Trust
                     Company, dated December 30, 1997 (previously filed as
                     Exhibit 10(a)(ii) to the Form 10/A-1 and incorporated
                     herein by reference)
 
           10(a)(iii) Certificate Purchase Agreement Among The El-Bee
                     Receivables Corporation, Corporate Receivables Corporation,
                     The Liquidity Providers Named Herein, CitiCorp North
                     American, Inc. and Bankers Trust Company, dated December
                     30, 1997 (previously filed as Exhibit 10(a)(iii) to the
                     Form 10/A-1 and incorporated herein by reference)
 
           10(a)(iv)  Loan Agreement Among The El-Bee Receivables Corporation,
                     The El-Bee Chargit Corp., Bankers Trust Company, The
                     Collateral Investors Parties Hereto and CitiCorp North
                     America, Inc., dated as of December 30, 1997 (previously
                     filed as Exhibit 10(a)(iv) to the Form 10/A-1 and
                     incorporated herein by reference)
 
           10(a)(v)  Intercreditor Agreement By and Among The El-Bee Chargit
                     Corp., The Elder-Beerman Stores Corp., Bankers Trust
                     Company, CitiCorp USA, Inc., CitiCorp North America, Inc.,
                     Corporate Receivables Corporation and the Liquidity
                     Providers Named Herein, dated as of December 30, 1997
                     (previously filed as Exhibit 10(a)(v) to the Form 10/A-1
                     and incorporated herein by reference)
 
           10(a)(vi)  Parent Undertaking Agreement Among The Elder-Beerman
                     Stores Corp. and Bankers Trust Company, dated as of
                     December 30, 1997 (previously filed as Exhibit 10(a)(vi) to
                     the Form 10/A-1 and incorporated herein by reference)
 
           10(a)(vii) Purchase Agreement (Chargit) Among The El-Bee Chargit
                     Corp. and The El-Bee Receivables Corporation, dated as of
                     December 30, 1997 (previously filed as Exhibit 10(a)(vii)
                     to the Form 10/A-1 and incorporated herein by reference)
 
           10(a)(viii) Purchase Agreement (Elder-Beerman) Among The
                     Elder-Beerman Stores Corp. and The El-Bee Chargit Corp.,
                     dated as of December 30, 1997 (previously filed as Exhibit
                     10(a)(viii) to the Form 10/A-1 and incorporated herein by
                     reference)
 
           10(a)(ix) Subordinated Note Between The El-Bee Receivables
                     Corporation and The El-Bee Chargit Corp, dated December 30,
                     1997 (previously filed as Exhibit 10(a)(ix) to the Form
                     10/A-1 and incorporated herein by reference)
 
           10(b)(i)   Credit Agreement Among The Elder-Beerman Stores Corp., The
                     Lenders Party Hereto, Citibank, N.A. and CitiCorp USA,
                     Inc., dated as of December 30, 1997 (previously filed as
                     Exhibit 10(b)(i) to the Form 10/A-1 and incorporated herein
                     by reference)
 
           10(b)(ii)  Borrower Pledge Agreement Made by The Elder-Beerman Stores
                     Corp. to Citibank, N.A., dated December 30, 1997
                     (previously filed as Exhibit 10(b)(ii) to the Form 10/A-1
                     and incorporated herein by reference)
 
           10(b)(iii) Chargit Pledge Agreement Made By The El-Bee Chargit Corp.
                     to Citibank, N.A., dated December 30, 1997 (previously
                     filed as Exhibit 10(b)(iii) to the Form 10/A-1 and
                     incorporated herein by reference)
 
           10(b)(iv) Security Agreement Made By The Elder-Beerman stores Corp.,
                     The El-Bee Chargit Corp., The Bee-Gee Shoe Corp. in Favor
                     of CitiCorp USA, Inc., dated December 30, 1997 (previously
                     filed as Exhibit 10(b)(iv) to the Form 10/A-1 and
                     incorporated herein by reference)
 
           10(b)(v)  Subsidiary Guaranty Made by The El-Bee Chargit Corp., dated
                     December 30, 1997 (previously filed as Exhibit 10(b)(v) to
                     the Form 10/A-1 and incorporated herein by reference)
 
                                       40
<PAGE>   43
 
           10(b)(vi) Subsidiary Guaranty Made by The Bee-Gee Shoe Corp., dated
                     December 30, 1997 (previously filed as Exhibit 10(b)(vi) to
                     the Form 10/A-1 and incorporated herein by reference)
 
           10(b)(vii) Form of Revolving Note (previously filed as Exhibit
                     10(b)(vii) to the Form 10/A-1 and incorporated herein by
                     reference)
 
           10(b)(viii) Letter Agreement Re: Assignment of Account By and Between
                     The Elder-Beerman Stores Corp., CitiCorp USA, Inc., and
                     Bankers Trust Company, dated December 30, 1997 (previously
                     filed as Exhibit 10(b)(viii) to the Form 10/A-1 and
                     incorporated herein by reference)
 
           10(c)      Form of Employment Agreement for Senior Vice Presidents
                     (previously filed as Exhibit 10(c) to the Form 10 and
                     incorporated herein by reference)*
 
           10(d)      Form of Employment Agreement for Executive Vice Presidents
                     (previously filed as Exhibit 10(d) to the Form 10 and
                     incorporated herein by reference)*
 
           10(f)      Form of Director Indemnification Agreement (previously
                     filed as Exhibit 10(f) to the Form 10 and incorporated
                     herein by reference)*
 
           10(g)      Form of Officer Indemnification Agreement (previously
                     filed as Exhibit 10(g) to the Form 10 and incorporated
                     herein by reference)*
 
           10(h)      Form of Director and Officer Indemnification Agreement
                     (previously filed as Exhibit 10(h) to the Form 10 and
                     incorporated herein by reference)*
 
           10(i)      The Elder-Beerman Stores Corp. Equity and Performance
                     Incentive Plan, Effective December 30, 1997 (previously
                     filed as Exhibit 10(i) to the 1997 Form 10-K and
                     incorporated herein by reference)*
 
           10(j)      Form of Restricted Stock Agreement for Non-Employee
                     Director (previously filed as Exhibit 10(j) to the Form 10
                     and incorporated herein by reference)*
 
           10(k)      Form of Restricted Stock Agreement (previously filed as
                     Exhibit 10(k) to the Form 10 and incorporated herein by
                     reference)*
 
           10(l)      Form of Deferred Shares Agreement (previously filed as
                     Exhibit 10(l) to the Form 10 and incorporated herein by
                     reference)*
 
           10(m)     Form of Nonqualified Stock Option Agreement for
                     Non-Employee Director (previously filed as Exhibit 10(m) to
                     the Form 10 and incorporated herein by reference)*
 
           10(n)      Form of Nonqualified Stock Option Agreement (previously
                     filed as Exhibit 10(n) to the Form 10 and incorporated
                     herein by reference)*
 
           10(o)      Employee Stock Purchase Plan (previously filed as Exhibit
                     10(o) to the Form 10 and incorporated herein by reference)*
 
           10(p)      Comprehensive Settlement Agreement By and Among The
                     Debtors, The ESOP and the ESOP Committee and the
                     Shareholders of The Elder-Beerman Stores Corp., dated as of
                     December 30, 1997 (previously filed as Exhibit 10(p) to the
                     1997 Form 10-K and incorporated herein by reference)
 
           10(q)      Tax Indemnification Agreement By and Among The
                     Elder-Beerman Stores Corp., the Direct and Indirect
                     Subsidiaries of Elder-Beerman, Beerman-Peal Holdings, Inc.,
                     The Beerman-Peal Corporation, Beerman Investments, Inc.,
                     The Beerman Corporation and The Individuals, Partnerships
                     and Trusts named Herein dated as of December 15, 1997
                     (previously filed as Exhibit 10(q) to the Form 10 and
                     incorporated herein by reference)
 
           10(r)      Tax Sharing Agreement By and Among The Elder-Beerman
                     Stores Corp., The Bee-Gee Shoe Corp. and The El-Bee Chargit
                     Corp., dated as of December 30, 1997 (previously filed as
                     Exhibit 10(r) to the Form 10 and incorporated herein by
                     reference)
 
                                       41
<PAGE>   44
 
           10(s)      Employment Agreement Between The Elder-Beerman Stores
                     Corp. and John A. Muskovich, dated December 30, 1997
                     (previously filed as Exhibit 10(s) to the 1997 Form 10-K
                     and incorporated herein by reference)*
 
           10(t)      Amended and Restated Employment Agreement Between The
                     Elder-Beerman Stores Corp. and Frederick J. Mershad, dated
                     December 30, 1997 (previously filed as Exhibit 10(t) to the
                     1997 Form 10-K and incorporated herein by reference)*
 
           10(u)      Employment Agreement Between The Elder-Beerman Stores
                     Corp. and James M. Zamberlan, dated December 30, 1997*
 
           10(v)      Employment Agreement Between The Elder-Beerman Stores
                     Corp. and Scott J. Davido, dated December 30, 1997*
 
           10(w)     Amended and Restated Employment Agreement Between The
                     Elder-Beerman Stores Corp. and Scott J. Davido, dated March
                     15, 1999*
 
           10(x)      Employment Agreement Between The Elder-Beerman Stores
                     Corp. and Steven D. Lipton, dated December 30, 1997*
 
           10(y)      Amended and Restated Credit Agreement Among The
                     Elder-Beerman Stores Corp., The Lenders Party Thereto,
                     Citibank, N.A. and CitiCorp USA, Inc., dated as of July 27,
                     1998 (previously filed as Exhibit 10(b)(i) to the Company's
                     Form S-1 and incorporated herein by reference)
 
           10(z)      Amended and Restated Security Agreement Made By The
                     Elder-Beerman Stores Corp., The El-Bee Chargit Corp., The
                     Bee-Gee Shoe Corp. in Favor of CitiCorp USA, Inc., dated
                     July 27, 1998 (previously filed as Exhibit 10(b)(iv) to the
                     Company's Form S-1 and incorporated herein by reference)
 
           10(aa)     Subsidiary Guaranty Made by Elder-Beerman West Virginia,
                     Inc., dated July 27, 1998 (previously filed as Exhibit
                     10(b)(vii) to the Company's Form S-1 and incorporated
                     herein by reference)
 
           21          Subsidiaries of the Company
 
           23          Consent of Independent Auditors
 
           24          Powers of Attorney
 
           27          Financial Data Schedule
 
     (b) Reports on Form 8-K
 
        The Company filed a Current Report on Form 8-K on November 17, 1998,
        disclosing that, on November 11, 1998, the Company amended its Rights
        Agreement.
 
     (c) The response to this portion of Item 14 is included as Exhibits to this
        report.
 
        * Indicates a management contract or compensatory plan or arrangement
          required to be filed pursuant to Item 14 of Form 10-K.
 
     (d) Financial Statement Schedules
 
        All financial statement schedules are included in the consolidated
        financial statements herein.
 
                                       42
<PAGE>   45
 
                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 15th day of
April, 1999.
 
                                          THE ELDER-BEERMAN STORES CORP.
 
                                                  /s/ SCOTT J. DAVIDO
                                          By:
                                          --------------------------------------
 
                                                      Scott J. Davido
                                                 Executive Vice President,
                                                Chief Financial Officer and
                                                          Treasurer
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Company and in the capacities indicated and on April 15, 1999.
 
<TABLE>
<CAPTION>
                  SIGNATURE                                      TITLE
                  ---------                                      -----
<C>                                            <S>                                        <C>
                      *                        Chairman of the Board of Directors and
---------------------------------------------  Chief Executive Officer
            Frederick J. Mershad               (Principal Executive Officer)
 
                      *                        President, Chief Operating Officer,
---------------------------------------------  Director
              John A. Muskovich
 
                      *                        Executive Vice President, Chief Financial
---------------------------------------------  Officer and Treasurer (Principal
               Scott J. Davido                 Financial Officer)
 
                      *                        Senior Vice President, Controller
---------------------------------------------  (Principal Accounting Officer)
              Steven D. Lipton
 
                      *                        Director
---------------------------------------------
              Stewart M. Kasen
 
                      *                        Director
---------------------------------------------
               Steven C. Mason
 
                      *                        Director
---------------------------------------------
            Thomas J. Noonan, Jr.
 
                      *                        Director
---------------------------------------------
               Bernard Olsoff
 
                      *                        Director
---------------------------------------------
             Laura H. Pomerantz
 
                      *                        Director
---------------------------------------------
                Jack A. Staph
 
                      *                        Director
---------------------------------------------
               John J. Wiesner
</TABLE>
 
* The undersigned, pursuant to certain Powers of Attorney executed by each of
  the directors and officers noted above and previously filed or filed herewith
  contemporaneously with the Securities and Exchange Commission, by signing his
  name hereto, does hereby sign and execute this report on behalf of each of the
  persons noted above, in the capacities indicated.
 
Dated: April 15, 1999                             /s/ SCOTT J. DAVIDO
                                          By:
                                          --------------------------------------
 
                                                      Scott J. Davido
                                                      Attorney-in-Fact
 
                                       43
<PAGE>   46
 
                                 EXHIBIT INDEX
 
2(a)           Third Amended Joint Plan of Reorganization of The Elder-Beerman
               Stores Corp. and its Subsidiaries dated November 17, 1997
               (previously filed as Exhibit 2 to the Company's Form 10 filed on
               November 26, 1997 (the "Form 10"), and incorporated herein by
               reference)
 
2(b)           Agreement and Plan of Merger by and Among The Elder-Beerman
               Stores Corp., The Elder-Beerman Acquisition Corp. and Stone &
               Thomas dated June 18, 1998 (previously filed as Exhibit 2(b) to
               the Company's Registration Statement on Form S-1 (File No.
               333-57447) (the "Form S-1") and incorporated herein by reference)
 
2(c)           First Amendment to Agreement and Plan of Merger By and Among The
               Elder-Beerman Stores Corp., The Elder-Beerman Acquisition Corp.
               and Stone & Thomas dated July 27, 1998 (previously filed as
               Exhibit 2(c) to the Company's Form S-1 and incorporated herein by
               reference)
 
3(a)           Amended Articles of Incorporation (previously filed as Exhibit
               3(a) to the form 10-K filed on April 30, 1998 (the "1997 Form
               10-K"), and incorporated herein by reference)
 
3(b)           Amended Code of Regulations (previously filed as Exhibit 3(b) to
               the Form 10 and incorporated herein by reference)
 
4(a)           Stock Certificate for Common Stock (previously filed as Exhibit
               4(a) to the Company's Form 10/A-1 filed on January 23, 1998 (the
               "Form 10/A-1") and incorporated herein by reference)
 
4(b)           Form of Registration Rights Agreement (previously filed as
               Exhibit 4(b) to the Form 10 and incorporated herein by reference)
 
4(c)           Rights Agreement By and Between The Elder-Beerman Stores Corp.
               and Norwest Bank Minnesota, N.A., dated as of December 30, 1997
               (previously filed as Exhibit 4.1 to the Company's Registration
               Statement on Form 8-A filed on November 17, 1998 (the "Rights
               Agreement") and incorporated herein by reference)
 
4(d)           Warrant Agreement by and Between Beerman-Peal Holdings, Inc. and
               the Elder-Beerman Stores Corp. for 249,809 shares of Common Stock
               at a strike price of $12.80 per share dated December 30, 1997
               (previously filed as Exhibit 4(d) to the 1997 Form 10-K and
               incorporated herein by reference)
 
4(e)           Warrant Agreement by and Between Beerman-Peal Holdings, Inc. and
               the Elder-Beerman Stores Corp. for 374,713 shares of Common Stock
               at a strike price of $14.80 per share dated December 30, 1997
               (previously filed as Exhibit 4(e) to the 1997 Form 10-K and
               incorporated herein by reference)
 
4(f)           Amendment No. 1 to the Rights Agreement, dated as of November 11,
               1998 (previously filed as Exhibit 4.2 to the Form 8-A and
               incorporated herein by reference)
 
10(a)(i)       Pooling and Servicing Agreement Among The El-Bee Receivables
               Corporation, The El-Bee Chargit Corp. and Bankers Trust Company,
               dated December 30, 1997 (previously filed as Exhibit 10(a)(i) to
               the Form 10/A-1 and incorporated herein by reference)
 
10(a)(ii)      Series 1997-1 Supplement Among The El-Bee Receivables
               Corporation, The El-Bee Chargit Corp. and Bankers Trust Company,
               dated December 30, 1997 (previously filed as Exhibit 10(a)(ii) to
               the Form 10/A-1 and incorporated herein by reference)
 
10(a)(iii)     Certificate Purchase Agreement Among The El-Bee Receivables
               Corporation, Corporate Receivables Corporation, The Liquidity
               Providers Named Herein, CitiCorp North American, Inc. and Bankers
               Trust Company, dated December 30, 1997 (previously filed as
               Exhibit 10(a)(iii) to the Form 10/A-1 and incorporated herein by
               reference)
 
10(a)(iv)      Loan Agreement Among The El-Bee Receivables Corporation, The
               El-Bee Chargit Corp., Bankers Trust Company, The Collateral
               Investors Parties Hereto and CitiCorp North America, Inc., dated
               as of December 30, 1997 (previously filed as Exhibit 10(a)(iv) to
               the Form 10/A-1 and incorporated herein by reference)
 
                                       44
<PAGE>   47
 
10(a)(v)       Intercreditor Agreement By and Among The El-Bee Chargit Corp.,
               The Elder-Beerman Stores Corp., Bankers Trust Company, CitiCorp
               USA, Inc., CitiCorp North America, Inc., Corporate Receivables
               Corporation and the Liquidity Providers Named Herein, dated as of
               December 30, 1997 (previously filed as Exhibit 10(a)(v) to the
               Form 10/A-1 and incorporated herein by reference)
 
10(a)(vi)      Parent Undertaking Agreement Among The Elder-Beerman Stores Corp.
               and Bankers Trust Company, dated as of December 30, 1997
               (previously filed as Exhibit 10(a)(vi) to the Form 10/A-1 and
               incorporated herein by reference)
 
10(a)(vii)     Purchase Agreement (Chargit) Among The El-Bee Chargit Corp. and
               The El-Bee Receivables Corporation, dated as of December 30, 1997
               (previously filed as Exhibit 10(a)(vii) to the Form 10/A-1 and
               incorporated herein by reference)
 
10(a)(viii)    Purchase Agreement (Elder-Beerman) Among The Elder-Beerman Stores
               Corp. and The El-Bee Chargit Corp., dated as of December 30, 1997
               (previously filed as Exhibit 10(a)(viii) to the Form 10/A-1 and
               incorporated herein by reference)
 
10(a)(ix)      Subordinated Note Between The El-Bee Receivables Corporation and
               The El-Bee Chargit Corp, dated December 30, 1997 (previously
               filed as Exhibit 10(a)(ix) to the Form 10/A-1 and incorporated
               herein by reference)
 
10(b)(i)       Credit Agreement Among The Elder-Beerman Stores Corp., The
               Lenders Party Hereto, Citibank, N.A. and CitiCorp USA, Inc.,
               dated as of December 30, 1997 (previously filed as Exhibit
               10(b)(i) to the Form 10/A-1 and incorporated herein by reference)
 
10(b)(ii)      Borrower Pledge Agreement Made by The Elder-Beerman Stores Corp.
               to Citibank, N.A., dated December 30, 1997 (previously filed as
               Exhibit 10(b)(ii) to the Form 10/A-1 and incorporated herein by
               reference)
 
10(b)(iii)     Chargit Pledge Agreement Made By The El-Bee Chargit Corp. to
               Citibank, N.A., dated December 30, 1997 (previously filed as
               Exhibit 10(b)(iii) to the Form 10/A-1 and incorporated herein by
               reference)
 
10(b)(iv)      Security Agreement Made By The Elder-Beerman stores Corp., The
               El-Bee Chargit Corp., The Bee-Gee Shoe Corp. in Favor of CitiCorp
               USA, Inc., dated December 30, 1997 (previously filed as Exhibit
               10(b)(iv) to the Form 10/A-1 and incorporated herein by
               reference)
 
10(b)(v)       Subsidiary Guaranty Made by The El-Bee Chargit Corp., dated
               December 30, 1997 (previously filed as Exhibit 10(b)(v) to the
               Form 10/A-1 and incorporated herein by reference)
 
10(b)(vi)      Subsidiary Guaranty Made by The Bee-Gee Shoe Corp., dated
               December 30, 1997 (previously filed as Exhibit 10(b)(vi) to the
               Form 10/A-1 and incorporated herein by reference)
 
10(b)(vii)     Form of Revolving Note (previously filed as Exhibit 10(b)(vii) to
               the Form 10/A-1 and incorporated herein by reference)
 
10(b)(viii)    Letter Agreement Re: Assignment of Account By and Between The
               Elder-Beerman Stores Corp., CitiCorp USA, Inc., and Bankers Trust
               Company, dated December 30, 1997 (previously filed as Exhibit
               10(b)(viii) to the Form 10/A-1 and incorporated herein by
               reference)
 
10(c)          Form of Employment Agreement for Senior Vice Presidents
               (previously filed as Exhibit 10(c) to the Form 10 and
               incorporated herein by reference)*
 
10(d)          Form of Employment Agreement for Executive Vice Presidents
               (previously filed as Exhibit 10(d) to the Form 10 and
               incorporated herein by reference)*
 
10(f)          Form of Director Indemnification Agreement (previously filed as
               Exhibit 10(f) to the Form 10 and incorporated herein by
               reference)*
 
10(g)          Form of Officer Indemnification Agreement (previously filed as
               Exhibit 10(g) to the Form 10 and incorporated herein by
               reference)*
 
                                       45
<PAGE>   48
 
10(h)          Form of Director and Officer Indemnification Agreement
               (previously filed as Exhibit 10(h) to the Form 10 and
               incorporated herein by reference)*
 
10(i)          The Elder-Beerman Stores Corp. Equity and Performance Incentive
               Plan, Effective December 30, 1997 (previously filed as Exhibit
               10(i) to the 1997 Form 10-K and incorporated herein by
               reference)*
 
10(j)          Form of Restricted Stock Agreement for Non-Employee Director
               (previously filed as Exhibit 10(j) to the Form 10 and
               incorporated herein by reference)*
 
10(k)          Form of Restricted Stock Agreement (previously filed as Exhibit
               10(k) to the Form 10 and incorporated herein by reference)*
 
10(l)          Form of Deferred Shares Agreement (previously filed as Exhibit
               10(l) to the Form 10 and incorporated herein by reference)*
 
10(m)          Form of Nonqualified Stock Option Agreement for Non-Employee
               Director (previously filed as Exhibit 10(m) to the Form 10 and
               incorporated herein by reference)*
 
10(n)          Form of Nonqualified Stock Option Agreement (previously filed as
               Exhibit 10(n) to the Form 10 and incorporated herein by
               reference)*
 
10(o)          Employee Stock Purchase Plan (previously filed as Exhibit 10(o)
               to the Form 10 and incorporated herein by reference)*
 
10(p)          Comprehensive Settlement Agreement By and Among The Debtors, The
               ESOP and the ESOP Committee and the Shareholders of The
               Elder-Beerman Stores Corp., dated as of December 30, 1997
               (previously filed as Exhibit 10(p) to the 1997 Form 10-K and
               incorporated herein by reference)
 
10(q)          Tax Indemnification Agreement By and Among The Elder-Beerman
               Stores Corp., the Direct and Indirect Subsidiaries of
               Elder-Beerman, Beerman-Peal Holdings, Inc., The Beerman-Peal
               Corporation, Beerman Investments, Inc., The Beerman Corporation
               and The Individuals, Partnerships and Trusts named Herein dated
               as of December 15, 1997 (previously filed as Exhibit 10(q) to the
               Form 10 and incorporated herein by reference)
 
10(r)          Tax Sharing Agreement By and Among The Elder-Beerman Stores
               Corp., The Bee-Gee Shoe Corp. and The El-Bee Chargit Corp., dated
               as of December 30, 1997 (previously filed as Exhibit 10(r) to the
               Form 10 and incorporated herein by reference)
 
10(s)          Employment Agreement Between The Elder-Beerman Stores Corp. and
               John A. Muskovich, dated December 30, 1997 (previously filed as
               Exhibit 10(s) to the 1997 Form 10-K and incorporated herein by
               reference)*
 
10(t)          Amended and Restated Employment Agreement Between The
               Elder-Beerman Stores Corp. and Frederick J. Mershad, dated
               December 30, 1997 (previously filed as Exhibit 10(t) to the 1997
               Form 10-K and incorporated herein by reference)*
 
10(u)          Employment Agreement Between The Elder-Beerman Stores Corp. and
               James M. Zamberlan, dated December 30, 1997*
 
10(v)          Employment Agreement Between The Elder-Beerman Stores Corp. and
               Scott J. Davido, dated December 30, 1997*
 
10(w)          Amended and Restated Employment Agreement Between The
               Elder-Beerman Stores Corp. and Scott J. Davido, dated March 15,
               1999*
 
10(x)          Employment Agreement Between The Elder-Beerman Stores Corp. and
               Steven D. Lipton, dated December 30, 1997*
 
10(y)          Amended and Restated Credit Agreement Among The Elder-Beerman
               Stores Corp., The Lenders Party Thereto, Citibank, N.A. and
               CitiCorp USA, Inc., dated as of July 27, 1998 (previously filed
               as Exhibit 10(b)(i) to the Company's Form S-1 and incorporated
               herein by reference)
 
10(z)          Amended and Restated Security Agreement Made By The Elder-Beerman
               Stores Corp., The El-Bee Chargit Corp., The Bee-Gee Shoe Corp. in
               Favor of CitiCorp USA, Inc.,
 
                                       46
<PAGE>   49
 
               dated July 27, 1998 (previously filed as Exhibit 10(b)(iv) to the
               Company's Form S-1 and incorporated herein by reference)
 
10(aa)         Subsidiary Guaranty Made by Elder-Beerman West Virginia, Inc.,
               dated July 27, 1998 (previously filed as Exhibit 10(b)(vii) to
               the Company's Form S-1 and incorporated herein by reference)
 
21             Subsidiaries of the Company
 
23             Consent of Independent Auditors
 
24             Powers of Attorney
 
27             Financial Data Schedule